Ormat mandates John Hancock to arrange US$350m financing
Steamboat Springs plant of Ormat, Nevada (source: Commons/ Wikimedia)
Alexander Richter
30 Jul 2010
Ormat Nevada mandates John Hancock Life Insurance to arrange senior secured construction and term loan facilities under DOE loan guarantee program of up to US$350m for three projects in Nevada.
In a release, “Ormat Technologies, Inc. (NYSE: ORA) announced today that its subsidiary, Ormat Nevada Inc. (“Ormat Nevada”) has mandated John Hancock Life Insurance Company (U.S.A) (“John Hancock”) to arrange senior secured construction and term loan facilities under DOE loan Guarantee application of up to $350 million for three geothermal projects currently under construction in Nevada.
The three projects are the McGinness Hills, Jersey Valley and Tuscarora geothermal projects, all located in Nevada. Each of the projects has a 20-year power purchase agreement with Nevada Power Company, a subsidiary of NV Energy. Collectively, the three projects represent between 60 MW and 120 MW of generation capacity, depending on the final assessment of resource feasibility following completion of phase 1 construction and each project’s initial operating period. The projects utilize Ormat’s proprietary OEC technology, which is installed in approximately 1,300 MW of geothermal power plants and other electricity generating systems around the world. Construction of all three projects has already commenced with commercial operation of the first phase of each project expected between 2011 and 2013.
The term sheet contemplates that, subject to final documentation, proceeds of the credit facilities will be drawn against milestones during the construction period for each project with the last draw occurring upon commercial operation. The availability of the credit facilities is subject to various conditions, including execution of mutually satisfactory documentation and approval of the United States Department of Energy (“DOE”).
John Hancock will act as the Lender Applicant under the Financial Institution Partnership Program (“FIPP”) that is supported by Section 1705 of the American Recovery and Reinvestment Act of 2009. Under this program, the DOE can provide a loan guarantee for up to 80% of loans provided to certain qualified renewable technologies. Ormat Nevada and John Hancock have submitted Part I of the loan guarantee application to the DOE. The process will continue with the DOE and John Hancock’s due diligence, followed by a conditional commitment for the financing, completion of documentation and closing of the financing. Based on the experience gained so far in the program, the Company expects that this process may take 6 to 12 months to be completed.”
“We are delighted that we can continue to expand our work under the FIPP program with a company that is as strong a leader in the US renewable energy industry as Ormat,” said John Anderson, Head of Power & Infrastructure Finance at John Hancock.
Dita Bronicki, CEO of Ormat Technologies said: “We are excited about this partnership with John Hancock and the DOE. John Hancock’s extensive experience working with DOE financing programs provides Ormat with an excellent opportunity to continue to expand our geothermal portfolio under advantageous financing terms. The DOE 1705 program is a unique funding opportunity for our U.S. projects that not only is cost effective for Ormat, but also allows us to create numerous ‘green’ jobs.”
Source: Company release via PR Newswire
