Ormat Technologies, Inc. (NYSE: ORA), announced that its subsidiary, Ormat Nevada Inc., concluded the second closing under a previously announced deal to sell part-ownership interests in certain geothermal power projects to affiliates of Morgan Stanley & Co. (NYSE: MS) and Lehman Brothers (NYSE: LEH), as institutional equity investors.
Under this second closing, the Galena 3 geothermal project was transferred to OPC LLC, and Ormat Nevada received an amount of approximately $64 million.
This is the second tranche of a transaction to monetize production tax credits (PTC) of certain projects by bringing in institutional investors as equity investors to own the projects jointly with Ormat Nevada.
As operator of all of the projects in the OPC LLC portfolio, Ormat Nevada will now also operate and maintain the Galena 3 project. Distributable cash flow generated by the projects as well as the production tax credits and the taxable income or loss associated with the projects, now including the Galena 3 project, will be allocated between Ormat Nevada and the institutional equity investors.
Once the institutional equity investors reach a target after tax yield on their investment in OPC, Ormat Nevada has the option to buy out the investors’ remaining interest in OPC at the then-current fair market value or, if greater, the investors’ "capital account" balance in OPC. Should Ormat Nevada exercise this purchase option, it would thereupon revert to being sole owner of all of the projects (including the Galena 3 project).
Commenting on the transaction, Dita Bronicki, CEO of Ormat said: "We are very happy to have achieved this milestone of a second closing for our OPC portfolio with our existing investors. Ormat remains interested in exploring other opportunities to utilize this financing model in our other projects under development and construction."
About Ormat Technologies
Ormat Technologies, Inc. is the only vertically-integrated company primarily engaged in the geothermal and recovered energy power business. The company designs, develops, owns and operates geothermal and recovered energy-based power plants around the world. Additionally, the company designs, manufactures and sells geothermal and recovered energy power units and other power-generating equipment, and provides related services.
Ormat currently operates the following geothermal and recovered energy-based power plants: in the United States — Brady, Heber, Mammoth, Ormesa, Puna, Steamboat and OREG 1; in Guatemala — Zunil and Amatitlan; in Kenya — Olkaria; and in Nicaragua — Momotombo.
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