Ormat Technology closes on $310 million project financing from OPIC

By Lisa Kerner

Charlotte, N.C., Nov. 13 - Ormat Technologies, Inc. subsidiary OrPower 4, Inc. closed on its previously announced $310 million limited-recourse project financing with the Overseas Private Investment Corp.

The funding, announced in August, is for the Olkaria III geothermal power complex located in Naivasha, Kenya, according to a company news release.

OrPower 4 received a disbursement of $85 million, the full amount of tranche I of the OPIC loan, and a disbursement of $135 million from tranche II of the loan, on Nov. 9.

The remaining amount of up to $45 million of tranche II is expected to be drawn over time prior to the commercial operation date of the Olkaria III expansion, which is expected in mid-2013, Ormat said.

The interest rate on the loan proceeds is variable and reset weekly until the commercial operation of the Olkaria III expansion.

For the initial reset period, the interest rate is 2.94% per annum.

As previously reported, the OPIC loan is comprised of two tranches totaling up to $265 million, with a final maturity of about 18 years, plus a standby tranche of up to $45 million in the event OrPower 4 elects to construct a further expansion of the project, up to 16 MW.

Loan proceeds will be used to pay costs of the existing facility and fund construction and well field drilling for the expansion of the Olkaria III complex.

Tranche I, in a total amount of up to $85 million, will be used primarily to refinance all or part of the outstanding third-party debt incurred to finance a portion of the construction costs of the existing Plant 1 at the Olkaria III complex, according to an 8-K filing with the Securities and Exchange Commission.

Disbursements under tranche I of the loan will bear interest at a fixed rate, payable quarterly in arrears each March, June, September and December.

Tranche II, in a total amount of up to $180 million, will be used to fund the construction and well field drilling for the expansion of the Olkaria III geothermal power complex to up to 84 MW.

Disbursements under tranche II will bear interest at a floating rate from the date of each such disbursement until the commercial operation date of Plant 2. Interest will then convert to a fixed rate.

Interest on tranche II will also be payable quarterly in arrears each March, June, September and December.

OrPower 4 may make voluntary prepayments of all or a portion of the OPIC loan subject to prior notice, minimum prepayment amounts and a prepayment premium of 2% in the first two years after the Plant 2 commercial operation date, reducing to 1% in the third year after the Plant 2 commercial operation date and without premium thereafter, the SEC filing said.

The loan is subject to customary mandatory prepayment, including from insurance and condemnation proceeds and from asset sales above certain thresholds.

In addition, the loan is subject to mandatory prepayment to the extent required to maintain a projected ratio of cash flow to debt service of 1.7 to 1 in the event of certain reductions in the generation capacity of the geothermal power plants.

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

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