Raser reaches final agreement for Thermo No.1 financing
Raser Technologies, Inc. reaches final agreements amending the Thermo No. 1 financing arrangements with the senior project debt holders and the project tax-equity partner.
According to a recent release, “Raser Technologies, Inc. (NYSE:RZ), announced that it has reached final agreements amending the Thermo No. 1 financing arrangements with the senior project debt holders and the project tax-equity partner.
Principal Executive Officer, Richard Clayton stated, “We are extremely pleased with the results of these amendments and note that this should improve the overall economics of our first power plant by allowing us to apply for the 30% U.S. Treasury grant applicable to renewable energy projects under the American Recovery and Reinvestment Act of 2009. Through this amendment, Raser will become 100% owner of the Thermo No. 1 power plant.”
Raser expects to apply for the treasury grant within the next several days. The grant application includes, among other things, a certificate of independent accountants relating to the capital costs of the project and a certificate of an independent engineer stating that the project was placed in service in 2009. The Treasury Department is required to pay the grant proceeds within 60 days of the application being deemed complete.
As part of the amendments, the timing for final performance testing and completion of the Thermo No. 1 Project has been extended to February 15, 2010. Raser will continue ramping up to full capacity and anticipates delivering approximately 10MW of geothermal power from its plant to the City of Anaheim before the performance testing date.
Under the new agreement, Raser will be the sole owner of the Thermo No. 1 project and future financing commitments between Raser and the tax equity partner have been canceled. Raser estimates that the project will qualify to receive approximately $33 million from the U.S. Treasury grant. Any amounts received from the grant will be used for payments to all members of the Thermo No. 1 financing partnership. Raser would receive $3.8 million immediately upon Thermo No. 1 receiving payment from the Treasury. The remainder of the grant funds will be placed in escrow until after the 10-day final performance testing is complete. Upon final completion, the senior secured lenders may receive a payment for debt reduction, the amount of which will be determined based on the results of the 10-day final performance test, and project reserves will be funded. The tax equity partner will then receive a redemption payment. The remainder of the grant proceeds will be used to pay any final amounts owed to the project turbine supplier and then distributed to Raser according to distribution provisions.
“We expect this restructuring and receipt of grant funds to enhance the economics of the Thermo 1 power plant and the distributions that will flow to Raser out of the project,” stated Raser’s Chairman, Kraig Higginson. “We note that the unvested warrants we issued to the tax equity partner under the original commitment letter will be forfeited and our balance sheet will improve by the amount of project debt and vendor payables retired with the proceeds from the U.S. Treasury grant. With this now behind us, we can focus our efforts on completing the funding for our additional projects going forward.”
Source: Company release via Business Wire