Israeli geothermal energy company Ormat Technologies Inc. (NYSE: ORA; TASE: ORA announced today that it has entered into a purchase agreement with Terra-Gen subsidiary TG Geothermal Portfolio to acquire two contracted geothermal assets in Nevada with a total net generating capacity of 67.5 MW as well as a greenfield development asset adjacent to one of the plants, and an underutilized transmission-line. The acquisition is expected to close in the second half of 2021, subject to regulatory and other customary closing conditions.
The two plants are in Dixie Valley, one of the largest geothermal plants in Nevada, which sells the electricity it produces to Southern California Edison under a long-term contract until 2038, and in Beowawe, which sells the electricity it produces to NV power under an agreement that expires in December 2025.
Under the terms of the agreement, Ormat will pay TG Geothermal Portfolio $171 million for 100% of the equity interests in a portfolio of entities and will assume debt and associated lease obligations of roughly $206 million book value as of March 31, 2021.
Ormat Technologies CEO Doron Blachar said, "This transaction bolsters our leadership position in the western United States, and particularly in Nevada, and increases our ability to provide electricity to both California and Nevada to help each states’ utilities meet their expanding clean energy requirements. This transaction aligns with our strategic goal of enhancing our geothermal portfolio through M&A activities. We are confident that we can leverage our distinctive core capabilities to unlock value by achieving synergies and enhancing generation and efficiency of the acquired assets. Additionally, to maximize our returns, we plan to use our strong balance sheet and low-cost capital sources to reduce over time the cost of assumed debt. Together with the projects’ skilled employees, I am confident that we can increase significantly the profitability and value of the acquired assets."
Ormat's share price is up 3.71% on the NYSE at $69.80, giving a market cap of $3.91 billion. Ormat had $404 million in cash at the end of the first quarter of 2021 for investments and short-term expenditure.
Published by Globes, Israel business news - en.globes.co.il - on May 24, 2021
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