Adds 14.75 MW, With Potential Expansion
to Up to 45 MW of Capacity
Ormat Technologies, Inc. (NYSE:ORA) announced today it has signed a
binding Memorandum of Understanding (MOU) to acquire, gradually,
85% of Geothermie Bouillante SA (GB) at a total company enterprise
value of up to around €52 million (approximately $56 million USD,
based on current foreign currency exchange rates). GB owns and
operates a 14.75 MW geothermal power plant and owns two exploration
licenses with a total additional potential capacity of up to 30 MW,
all located in Guadeloupe Island, a French territory in the
Caribbean.
The MOU was signed with the owner of GB, Sageos
holding (Sageos), a fully owned subsidiary of Bureau de Recherches
Géologiques et Minières (BRGM), the French geological survey.
Upon closing, Ormat will hold approximately 80% of GB which will be
increased to 85% within two years by capital investment agreed upon
in the MOU.
Ormat’s total consideration will be paid in
installments in accordance with the specific milestones, including
production milestones, expected to be achieved in the next few
years. On the basis of the MOU, Ormat and Sageos will negotiate a
definitive Investment Agreement (IA) subject to customary employee
and Board consultation processes according to French law. The IA
will be subject to customary conditions precedents for closing,
including, among others, certain approvals from third parties.
Closing is expected by May 2016 and the transaction is expected to
be immediately accretive to Ormat’s EPS.
GB has two Power Purchase Agreements (PPAs) with
Électricité de France S.A. (EDF) the French electric utility. A new
15-year PPA with EDF with improved energy rates is expected to
enter into force in January 1, 2016 and replace the current
PPAs.
As a global leader in the geothermal industry,
with vast experience in constructing and operating geothermal power
plants, Ormat is confident that with its technology and expertise
it can optimize the use of the resource and existing facilities and
recover its current approximate production of 10 MW to its designed
production of 14.75 MW by mid-2017. Additionally, Ormat plans
modifications to the existing equipment as well as to further
develop the asset, with a potential of reaching a total of 45 MW in
phased development, by 2021. To accommodate the initial acquisition
price and the future capital investments, Ormat plans to use
existing cash and future cash flow.
“This acquisition represents another milestone
in the execution of our strategic plan to expand our global
footprint and enhance our portfolio through targeted M&A
activity,” noted Isaac Angel, Chief Executive Officer. “This
transaction is a strategic fit for Ormat as it will enable us to
leverage our technology, engineering, procurement and construction
capabilities and our geothermal expertise to add value to the
assets we acquire as well as to Ormat shareholders. We plan to
continue our proactive search for acquisition opportunities
worldwide.”
As a major renewable plant in Guadeloupe Island,
the Bouillante geothermal plant is entitled to certain benefits
from the French government that were set in order to promote
renewable energy, mainly through feed-in tariff and tax
benefits.
BRGM group’s decision to partner with Ormat as
the majority owner and industrial operator in GB is part of the
French Government strategy to support the development of geothermal
energy in Guadeloupe and globally, as a contribution to energy
transition and lower CO2 emissions. Ormat will provide GB with the
skills and resources that will make an expansion feasible. Both Ms.
Ségolène Royal, the Minister of Ecology, Sustainable Development
and Energy, and Mr. Emmanuel Macron, the Minister of Economy,
Industry and Digital Affairs have expressed support for Ormat
decision to invest in Guadeloupe to further enhance and expand
Bouillante geothermal production.
Ms. Ségolène Royal stated: “As France is hosting
COP21, the decision of Ormat Technologies, US Company listed on the
NYSE and a global player in the field of geothermal energy, to
invest in the French island of Guadeloupe for the further
development of a clean and renewable energy source is a vindication
of the French government’s policy. It demonstrates, once again,
that France is a desirable investment destination for
environmentally conscious corporates. The recently-adopted energy
transition law fosters the development of renewable sources of
energy. In Guadeloupe, geothermal energy is highly welcomed as an
alternative to fossil fuel for power production. We will fully
support Ormat’s intention to expand the production of Bouillante
and develop local employment in the coming years in accordance with
their ambitious industrial plan.”
“After having pioneered the development of
Guadeloupe geothermal resources in our capacity as a leading
European research institute in geosciences, we are delighted to
hand over the further development of Bouillante as a key producer
of clean energy in Guadeloupe to Ormat, a first-class industry
leader in the geothermal arena, who will develop it to contribute
to the objectives of the recently adopted French energy transition
law. This achievement is a reward for our long term commitment to
this renewable source of energy. Our scientific research effort and
service activities will continue to pave the way for further
successes,” said Mr. Vincent Laflèche, Chairman and CEO of
BRGM.
About Ormat Technologies
With five decades of experience, Ormat Technologies, Inc. is a
leading geothermal company and the only vertically integrated
company solely engaged in geothermal and recovered energy
generation (REG), with the objective of becoming a leading global
provider of renewable energy. The company owns, operates, designs,
manufactures and sells geothermal and REG power plants primarily
based on the Ormat Energy Converter - a power generation unit that
converts low-, medium- and high-temperature heat into electricity.
With 69 U.S. patents, Ormat’s power solutions have been refined and
perfected under the most grueling environmental conditions. Ormat
has 470 employees in the United States and over 600 overseas.
Ormat’s flexible, modular solutions for geothermal power and REG
are ideal for the vast range of resource characteristics. The
company has engineered, manufactured and constructed power plants,
which it currently owns or has installed to utilities and
developers worldwide, totaling approximately 2,000 MW of gross
capacity. Ormat’s current 666 MW generating portfolio is spread
globally in the U.S., Guatemala and Kenya.
Ormat’s Safe Harbor
StatementInformation provided in this press release may
contain statements relating to current expectations, estimates,
forecasts and projections about future events that are
"forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
generally relate to Ormat's plans, objectives and expectations for
future operations and are based upon its management's current
estimates and projections of future results or trends. Actual
future results may differ materially from those projected as a
result of certain risks and uncertainties. For a discussion of such
risks and uncertainties, see "Risk Factors" as described in Ormat
Technologies, Inc.'s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 26, 2015.
These forward-looking statements are made only
as of the date hereof, and we undertake no obligation to update or
revise the forward-looking statements, whether as a result of new
information, future events or otherwise.
Ormat Technologies Contact:
Smadar Lavi
Investor Relations
775-356-9029
slavi@ormat.com
Investor Relations Agency Contact:
Rob Fink/Brett Maas
Hayden - IR
646-415-8972/646-536-7331
rob@haydenir.com / brett@haydenir.com
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