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US Geothermal receives $33m cash grant payment for Neal Hot Spring

US Geothermal receives $33m cash grant payment for Neal Hot Spring Neal Hot Springs project site, Oregon (source: U.S. Geothermal)
Alexander Richter 13 Aug 2013

U.S. Geothermal subsidiary USG Oregon receives cash grant payment in the amount of $33 million from the U.S. Department of Treasury, with about $11 million were used to repay the project loan, $11 million for project reserves, and $9.7 million was distributed as equity to project owners.

U.S. Geothermal Inc. announced today the distribution of the cash grant at the Neal Hot Springs geothermal power project.

As previously announced on April 13, 2013, U.S. Geothermal’s subsidiary, USG Oregon LLC, received a cash grant payment of $32,749,541 from the U.S. Department of Treasury for Specified Energy Property under Section 1603, Division B of the American Recovery and Reinvestment Act of 2009.

The cash grant funds have been held in a controlled account established by the U.S. Department of Energy as guarantor of the low interest rate loan provided by the U.S. Treasury’s Federal Financing Bank under the DOE’s Title XVII loan guarantee program, which was created by the Energy Policy Act of 2005. Proceeds of the cash grant were distributed in accordance with the loan agreement, with $11,870,137 of the proceeds being used to prepay the project loan, $11,167,473 of proceeds being used to fund a series of project reserves, and the balance of $9,711,930 being distributed as equity to the project owners.

After the loan prepayment, the remaining final loan balance is $70.4 Million. This loan has 21.5 years remaining with an aggregate fixed interest rate of 2.598%.

“We are very pleased to have qualified for and received the Investment Tax Credit Cash Grant from the U.S. Department of Treasury, and are glad to have those funds now released to us. Where the project initially qualified for a loan amount of $98 million, it has now been reduced to a total final loan of only $70 million.” said Mr. Dennis Gilles, Chief Executive Officer of U.S. Geothermal Inc. “We are also fortunate to have the benefit of such low cost debt for the Neal Hot Springs project for the next several decades.”

Source: Company release via Marketwatch