Ormat Technologies gets $350 million project loan from John Hancock

By Lisa Kerner

Charlotte, N.C., Sept. 26 - Ormat Technologies, Inc.'s wholly owned indirect subsidiary OFC 2 LLC and its project subsidiaries agreed to a $350 million 20-year loan under a financing agreement with John Hancock Life Insurance Co. (USA).

The loan is guaranteed by the Department of Energy's Loan Programs Office under Section 1705 of Title XVII of the Energy Policy Act of 2005 of the department's Loan Guarantee Program, an Ormat news release said.

Proceeds will be used for three geothermal power facilities located in the Nevada.

The facilities will provide power through 20-year power purchase agreements with Nevada Power Co., a subsidiary of NV Energy.

"Support from the 1705 program enables us to expand our geothermal portfolio in the U.S. under financing terms for the two-phase structure of the project that we would otherwise not obtain in the private markets," Ormat Technologies chief executive officer Dita Bronicki said in a news release.

Ormat said it previously entered into several rate lock transactions, as insurance against an increase in the 10-year Treasury rate, until the funding date of the loan. As a result, Ormat is expecting to incur a pre-tax loss of about $17 million, which will adversely affect its third-quarter 2011 financial results.

Reno, Nev.-based Ormat Technologies is a geothermal and recovered energy power business.

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