U.S. Geothermal secures $20 million loan for development activities

Neal Hot Spring geothermal plant (source: U.S. Geothermal)
Alexander Richter 21 May 2016

U.S. Geothermal has secured debt financing of $20 million from Prudential Capital Group with option to secure up to $50 million in additional debt. The financing is to help the company maximizing MW output of its plants and projects.

As reported by U.S. Geothermal Inc. in a press release before the weekend, its wholly-owned subsidiary, Idaho USG Holdings LLC closed on a $20 million debt facility from Prudential Capital Group. Under terms of the financing agreement, the Company has the option, without obligation, to issue additional debt, up to $50 million in aggregate within the next two years. The initial $20 million loan has a fixed interest rate of 5.8% per annum. The loan principal amortizes over twenty years, with a seven-year term. Principal and interest payments are made semi-annually.

The loan is collateralized with the Company’s ownership interest in the Neal Hot Springs and Raft River projects. The 22 MW Neal Hot Springs project is owned 60% by the Company and 40% by Enbridge. The 13 MW Raft River project is owned 95% by the Company and 5% by Goldman Sachs.

“This attractive debt facility strengthens our balance sheet and provides funds to support the development of our project pipeline and other opportunities that may become available in the next few years,” said Dennis Gilles, CEO of U.S. Geothermal. “We are also pleased to enhance our strategic relationship with Prudential, who is also the lender on our San Emidio project.”

“U.S. Geothermal has proven itself to be one of the leading developers and operators of geothermal projects,” said Wendy Carlson, Managing Director of Prudential Capital Group’s Energy Finance Group – Power. “We are excited to provide capital, which will in turn be used to support the Company’s growth prospects. This investment reflects our strategy of being a reliable provider of capital to high quality developers with proven track records in the North American power industry.”

Proceeds from the loan will be used to fund capital expenditures, payoff an existing 7.0% interest loan of approximately $1 million, increase the output at existing facilities, advance the development of our existing project pipeline, pursue strategic acquisitions, and for general corporate purposes.

U.S. Geothermal’s plans to expand its MW output

  • US Geothermal has recently completed a number of steps to significantly expand its MW output:
  • Acquired from Goldman Sachs the majority of their cash flow interest in and ownership of the Raft River geothermal project.
  • Acquired three new, uninstalled binary power plants that can be deployed at both development and existing projects.
  • Completed the drilling of well EC-2A at its El Ceibillo project in Guatemala, successfully intersecting a commercial geothermal resource.
  • Received transmission interconnection approval from the California Independent System Operator for its Geysers Power Project.

In addition:

  • In 2016 a second leg will be drilled on a production well at its Raft River Project. This is expected to add up to 3 MWs to its power output.
  • The cooling system at the Neal Hot Springs project is planned to be modified to hybrid wet/dry cooling increasing annual average output by up to 3 MWs.
  • The Company has in place additional advanced development projects with an estimated aggregate 90MW at three sites in the western US and another site in Guatemala.

Source: Company release via Marketwatch