Ormat Technologies Inc. (NYSE: ORA) today announced that its wholly-owned subsidiary Ormat Nevada Inc has entered into a binding agreement with infrastructure funds managed by Northleaf Capital Partners. Ormat will put geothermal and recovered energy generation power plants into a newly established joint-venture holding company with Northleaf, which will acquire a 40% equity stake. Ormat will raise $175 million from the deal, which is expected to close in the first quarter of 2015.
The power plants that will be contributed to the joint venture include Ormat's Puna geothermal power plant in Hawaii, the Don A. Campbell geothermal power plant in Nevada, and nine power plant units across three recovered energy generation assets known as OREG 1, OREG 2, and OREG 3. Ormat will continue to provide day-to-day management control, operations and maintenance control over the projects.
Ormat CEO Isaac angel said, "This milestone transaction represents a significant opportunity for Ormat to strengthen its balance sheet by monetizing operational assets at an attractive valuation. Our transaction process initially identified a number of global institutional and private equity infrastructure investors seeking long term stable investment opportunities. We are delighted to join forces with Northleaf, based on the strength of their substantial and meaningful interest in our geothermal and recovered energy plants. The valuation, which represents a premium to our current trading valuation, reinforces the value of our operational assets and underscores our experience and proven track record. By partnering with a proven and strong capital partner we are highlighting the potential for future transactions and additional growth opportunities together."
He added, "During this period of volatility in global energy markets and commodities pricing, we worked closely with our new investor to structure an arrangement related to our Puna geothermal power plant that provides Northleaf a stable energy rate. This arrangement mitigates Northleaf's exposure to fluctuations in energy prices, while Ormat stands to benefit from the upside when prices improve."
Northleaf managing director Jamie Storrow said, "Direct investments in contracted geothermal assets in partnership with a world-leading company such as Ormat are consistent with Northleaf's strategy and offer significant potential for stable, long-term returns. The partnership with Ormat is very appealing to us, given the company's reputation as a leading geothermal manufacturer, operator and developer. We look forward to maintaining a productive and long-term relationship with Ormat."
Published by Globes [online], Israel business news - www.globes-online.com - on February 5, 2015
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