Item 1.01. Entry into a Material Definitive Agreement.
On January 8, 2009, Ormat Technologies, Inc. (the "Registrant") announced that
its indirect wholly-owned subsidiary, OrPower 4, Inc. ("OrPower 4"), entered
into the following agreements for the financing of its Olkaria III geothermal
power project in Kenya (collectively, the "Agreements"): a Common Terms
Agreement dated January 5, 2009 with DEG - Deutsche Investitions-Und
Enticklungsgesellschaft MBH ("DEG") and Société de Promotion et de Participation
pour la Coopération Economique ("PROPARCO"), as original lenders, DEG, in its
capacity as Global Agent, and BNY Corporate Trustee Services Limited, as
Offshore Security Agent; individual facility loan agreements, each also dated
January 5, 2009, with DEG and PROPARCO, referred to as the DEG A Loan Agreement,
Proparco A Loan Agreement, DEG B Loan Agreement, and DEG C Loan Agreement.
The Agreements provide OrPower 4 with up to $105 Million of senior secured debt,
subject to the terms and conditions of the Agreements, including OrPower 4's
fulfillment of customary conditions precedent to disbursement of the loans. The
proceeds of the loans will be applied by OrPower 4 to certain approved costs of
the Olkaria III geothermal power project. Loans under the Agreements will have a
scheduled maturity of ten (10) years, and will bear interest at LIBOR plus 4%,
but OrPower 4 has an option, subject to agreement with the Lenders, to convert
all (or, subject to an exception provided, substantially all) of the loans to a
fixed rate of interest. Principal and interest payments under the Agreements are
due semi-annually (each June and December), with principal payments commencing
on December 15, 2009. OrPower 4 has a right to make voluntary prepayments of all
or a portion of the loans (subject to prior notice, minimum prepayment amounts,
and a prepayment premium of 2% in the first two years after the end of the
availability period for loans, reducing to 1% in the following three years, and
without premium thereafter). In addition, the loans are subject to customary
mandatory prepayment, including from insurance and condemnation proceeds above
certain threshholds and to the extent such proceeds are not otherwise applied to
repair of the project in accordance with OrPower 4's obligations under its power
purchase agreement.
OrPower 4's repayment and other obligations under the Agreements will be secured
by substantially all of the assets of OrPower 4, including all property, plant
and equipment, revenues, contract rights, and insurance, as well as by a pledge
of all of the equity interests in OrPower 4 by Ormat Holding Corp., an indirect
wholly-owned subsidiary of the Registrant that is the immediate parent entity of
OrPower 4. The definitive security documents that will establish and govern the
lenders' security interest in the collateral remain to be finalized between
OrPower 4 and its lenders and the perfection and registration of the collateral
package constitutes one of the conditions precedent to loan disbursements.
The Agreements include representations, warranties, covenants and conditions
precedent to disbursement of the loans that are customary for international
project financings of this type, including covenants to comply with applicable
environmental and social standards, meet prudent electricity standards and other
operational
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requirements, and provide financial and other periodic reports. OrPower 4 is
also required to maintain a debt service cover ratio, a projected debt service
cover ratio, a debt to equity ratio, and an equity to total assets ratio (in
each case as defined in, and subject to certain qualifications set forth in, the
Agreements). In addition, OrPower 4 is subject to various restrictive covenants
under the Agreements which include limitations on OrPower 4's ability to incur
additional indebtedness, pay dividends, make expenditures in excess of approved
budgets, dispose of assets, change the nature of its business, or undertake
mergers or other business combinations.
Under certain circumstances, the lending commitments under the Agreements may be
terminated by the lenders and amounts outstanding under the loans may be
accelerated. Such events of default include failure to pay any principal,
interest or other amounts when due, failure to comply with covenants, breach of
representations and warranties, non-payment or acceleration of other debt of
OrPower 4 or certain of its affiliates, bankruptcy of OrPower 4 or certain of
its affiliates, judgments rendered against OrPower 4, expropriation, change of
control, failure by major project parties to comply with obligations under
project related agreements, revocation or early termination of security
documents or certain project related agreements, subject to various exceptions
and notice, cure and grace periods.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is furnished as part of this report on Form 8-K:
99.1 Press release of the Registrant dated January 8, 2009.
Safe Harbor Statement
Information provided in this report on Form 8-K 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 the Registrant's plans, objectives and expectations for
future operations and are based upon 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 March 5, 2008.
These forward-looking statements are made only as of the date hereof, and the
Registrant undertakes no obligation to update or revise the forward-looking
statements, whether as a result of new information, future events or
otherwise.
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