Subscribe to Print Edition | Sun., November 08, 2009 Cheshvan 21, 5770 | | Israel Time: 02:17 (EST+7)
Haaretz israel news English
web haaretz.com
Jewish World Haaretz Toolbar
Diplomacy
Defense Opinion National
Print Edition
Car Rental
Focus U.S.A. Strenger than Fiction Business Travel Magazine Week's End Anglo File Books
Share |
Ormat buys back share in partnership at 40% discount
By Yoram Gabison

Ormat Technologies third quarter financial results, published yesterday, included a 48% increase in net profits, to $23. 4 million, and revenues that were up 20% over the parallel quarter in 2008, to $119.8 million.

Last year Ormat Technologies lost $22.6 million on an investment in bonds backed by auction rate securities from the late Lehman Brothers investment bank.
Advertisement

Now it turns out that the bank's demise also has a positive side. Ormat will record $13 million in pre-tax capital gains following a deal to buy 30% of the rights in Lehman Brothers' partnership with Morgan Stanley investment bank, for $18.5 million.

Ormat Technologies is the operational arm of Ormat Industries, a company traded on the Tel Aviv Stock Exchange. Industries shares rose 4% on the Tel Aviv Stock Exchange yesterday.

The partnership was founded by Ormat Nevada, a subsidiary of Ormat Technologies, jointly with Lehman Brothers and Morgan Stanley, as the owner of Ormat's four geothermal projects in Nevada.

The partnership was supposed to speed up the use of tax benefits, such as accelerated depreciation and tax credits on the production of electricity from a renewable energy source. In June 2007 and April 2008 Ormat Nevada sold the partnership rights to Lehman Brothers and Morgan Stanley for $135 million in cash.

The agreement with the two banks stated that Ormat would transfer the cash flow from the projects and the tax benefits to the banks, until a predetermined yield - apparently 7% per year - was achieved. When that target was reached, Ormat was supposed to receive 95% of the rights to the cash flow and tax benefits, and was to buy the partners' rights to the projects at fair value.

Ormat Technologies is now purchasing the rights to the partnership, and the fair value of the commitment to transfer 30% of the rights to the cash flow from the four projects and their tax benefits is $31.5 million - such that Ormat will be buying the commitment at a 41.3% discount.

But losing business to a former employee

At the same time Ormat Technologies lost some business when Southern California Edison electric company, the Ormat group's biggest customer (22.6% of revenues in 2008), announced it has agreed to buy up to 150 megawatts from a geothermal power plant to be built in Imperial Valley by 2013 by Ram Power. Ram's CEO is Hezi Ram, former director of business development at Ormat Technologies.

A subsidiary of Ram Power and Magma Energy (which is traded on the Toronto stock exchange) last month won an international tender from the Nicaraguan government, for the purchase of two land concessions, each measuring 100 square kilometers, for exploratory drillings in search of geothermal reservoirs. The companies will start drilling in the first quarter of 2010 and will continue for 27 months.

Ram, who had viewed himself as a candidate for CEO of Ormat Technologies, left the company when the Bronicki family decided to give the top post to Yoram Bronicki. Ram founded a geothermal technology company in Reno, Nevada, not far from Ormat Technologies headquarters. Ram Power is currently trading on the Toronto stock exchange at a market cap of $458 million, while Ormat is worth about $1.7 billion.
PROMOTION: Mamilla Hotel
Bookmark to del.icio.us  
 
Folkie fights demolition
Pete Seeger uses 'Turn, Turn, Turn' to help end Israeli razing of Palestinian homes.
Coach Hitler
U.K. children believe the Fuhrer managed Germany's national soccer team, a poll shows.
Special Offers
Advertisement
Eldan Rent a Car
Israel's leading car rental company offers you a 20% discount on online reservations
Date Local Jewish Singles
Ready to meet your match? Join Jdate today!
Junkyard
Junk a car - get free towing nationwide and a tax-deductible receipt
More Headlines
01:42 PM heads to Washington, under threat of Palestinian statehood declaration
01:52 Despite retirement announcement, pundits expect Abbas to stay
23:46 Obama: Israel won't know peace while Palestinians are gripped by despair
15:28 Iran will not exchange uranium with the West, top official says
16:44 Turkey FM: Israel ties could improve with Syria talks
19:28 ANALYSIS / How Israel's war with Iran will be fought
16:47 Fort Hood gunman's family: America made him what he is
23:50 TV ROUND-UP: Leaders speak at Rabin memorial; parachuter crashes
01:56 Pete Seeger's role in ending Israeli house demolitions
12:27 Hitler was a German soccer coach, kids tell U.K. poll
20:29 Police confiscate drugs, counerfeit goods in raid on convenience stores
12:55 Hezbollah agrees to join Lebanon unity government
21:25 UN condemns Israel, Hezbollah violations
Home | TV | Print Edition | Diplomacy | Opinion | Arts & Leisure | Sports | Jewish World | Site rules |
| Advert: Recommended Restaurants | Makom: Engaging on Israel
| Search engine marketing
Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.
© Copyright  Haaretz. All rights reserved