Ormat Technologies (NYSE: ORA) signed a binding memorandum of understanding (MOU) to gradually acquire 85 percent of the Bouillante geothermal plant for approximately $56 million on Guadeloupe Island, a French territory in the Caribbean.
The MOU was signed with the plant’s owner, Sageos Holding, a fully owned subsidiary of Bureau de Recherches Geologiques et Minieres (BRGM). Upon closing, Ormat will hold approximately 80 percent of GB that will be increased to 85 percent within two years by capital investment agreed upon in the MOU. The 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 subject to customary conditions. Closing is set for May 2016 and the deal is expected to be immediately accretive to Ormat’s EPS.
GB has two power purchase agreements with Electricite de France SA. A new 15-year PPA with EDF with improved energy rates is expected to enter into force in Jan. 1, 2016 and replace the current PPAs.