Raser Technologies, Inc. (NYSE Arca: RZ) announced last week an agreement with Merrill Lynch for financing of up to 155 megawatts (MW) of geothermal power plants.
The agreement includes initial commitment to provide non-recourse project financing for Raser’s first 10.5 MW geothermal power plant and provides Raser with 95% of the fees and distributions of the partnership.
Raser says it expects to receive approximately $4 million per year in cash fees and distributions, along with other tax benefits, during the first three years of operations from the 10.5 MW power plant after maintenance, operating expenses and debt service, and approximately $2.5 million per year in cash fees and distributions during the first ten years of operations.
After the debt is retired in year 15 of the project, Raser expects to receive net distributions of approximately $3.5 million per year for the remaining life of the project, according to a release.
Raser expects subsequent power plants developed under this agreement to have similar economics.
Raser says the plant is expected to be placed in service no later than the third quarter of 2008.
The financing commitment for the first 10.5 MW project is up to $44 million, in the form of 15-year, fully amortizing fixed rate notes, to fund approximately $33 million of total construction costs.
The expected useful life of Raser’s geothermal power plants is approximately 35 years.
Brent M. Cook, Raser’s CEO, commented, "This is the first of what we expect to be many agreements to accelerate the development of clean, renewable energy production utilizing our geothermal technology and resources. This unique agreement provides the required up-front capital to complete our initial projects and keep us on pace to fulfill our goal to initiate the development of 100 MW per year for the first three years of our geothermal power production effort, and 150 MW each year thereafter."
About Raser Technologies
Raser is a publicly-traded, environmentally-focused technology licensing and development company operating in two business segments. Raser’s Transportation and Industrial Technology segment focuses on using Raser’s SymetronTM technology to improve the efficiency of electric motors, generators, power electronic drives and other applications. Raser’s Power Systems segment is seeking to develop clean, renewable geothermal electric power plants and bottom-cycling operations, incorporating licensed heat transfer technology and Raser’s SymetronTM technology.
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