Ormat Technologies closes $1 billion convertible notes offering

Ormat Technologies Inc. (NYSE: ORA) completed a $1 billion private offering of convertible senior notes, the geothermal energy company announced March 23.

The offering includes $825 million of 1.50% Series A Convertible Senior Notes and $175 million of 0.00% Series B Convertible Senior Notes, both due 2031. The notes were sold to qualified institutional buyers under Rule 144A of the Securities Act.

The Series A Notes carry a 1.50% annual interest rate payable semi-annually, while the Series B Notes do not bear regular interest. Both series mature March 15, 2031, unless converted, redeemed or repurchased earlier. The initial conversion price reflects a 30% premium over the company's stock price at pricing.

Holders of Series B Notes can require the company to repurchase their notes on March 15, 2027, at 100% of principal amount plus any accrued special interest.

Ormat used approximately $287.9 million of net proceeds, plus $25 million cash and about 0.6 million common shares, to repurchase $285.9 million of its existing 2.50% convertible notes due 2027 through private transactions. The company also used $25 million to repurchase common shares, with remaining proceeds designated for general corporate purposes.

"We elected to execute this capital raise in the convertible market as it provided us with the best combination of low and no cash coupon, financial flexibility, and the ability to reduce equity dilution versus other debt and equity financing alternatives," said Chief Executive Officer Doron Blachar.

Ormat operates geothermal and energy storage facilities with a current generating portfolio of 1,835MW across the United States, Kenya, Guatemala, Indonesia, Honduras and Guadeloupe.

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