Ormat Technologies, Inc. Announces a Non-Cash Pre-Tax Charge for Impairment to its North Brawley Geothermal Power Plant

Ormat Technologies, Inc. Announces a Non-Cash Pre-Tax Charge for Impairment to
                   its North Brawley Geothermal Power Plant

PR Newswire

RENO, Nev., Jan. 23, 2013

RENO, Nev., Jan. 23, 2013 /PRNewswire/ -- Ormat Technologies, Inc. (NYSE: ORA)
announced today that it will record a non-cash pre-tax charge of up to $230
million during the fourth quarter of 2012 for impairment to the company's
North Brawley power plant located in Imperial County, California.

(Logo: http://photos.prnewswire.com/prnh/20040422/LATH066LOGO)

The North Brawley power plant was placed in service under its power purchase
agreement with Southern California Edison (SCE) in 2010. However, the North
Brawley geothermal field has been much more difficult to operate than other
fields and the power plant has been unable to reach its design capacity of 50
MW. Instead, it has been operating at capacities between 20 MW and 33 MW.
This generation level has been achieved following significant additional
capital expenditures and higher than anticipated operating costs.

In order to improve the economics of the North Brawley power plant, the
company approached SCE to discuss various contractual alternatives to the
power purchase agreement and, in early 2012, reached a written understanding
to engage in discussions with third parties about purchasing the power at
better rates. However, in a letter dated January 14, 2013, SCE informed the
company that it is no longer interested in pursuing alternatives to the
current power purchase agreement, thus retracting its permission to the
company to explore a replacement power purchase agreement with higher
electricity prices.

As a result of SCE's notification and the resulting continuation of the
current low price regime under the existing power purchase agreement, coupled
with a further understanding of the cost and probability of success of
additional well-field work which has been accumulated in the recent months,
the company has concluded that it will not be economical to continue to invest
the substantial capital required to increase the generating capacity of the
North Brawley plant. Accordingly, the company has decided to operate the
plant at the current capacity level of approximately 27 MW and refrain from
additional capital investment to expand the capacity. The company expects to
record a non-cash pre-tax charge for impairment to the North Brawley power
plant in the fourth quarter of 2012, which is currently estimated to be in an
amount of up to $230 million. The impairment charge will result in a material
loss in the fourth quarter and for the full year 2012. The company does not
expect that the impairment charge will affect its ability to meet the
financial covenants under any of its corporate debt agreements or materially
adversely affect its future operational results.

"Although we expect that the substantial reduction in operating expenses
through 2012 will result in positive EBITDA for North Brawley going forward,
the inability to replace the current power purchase agreement with a new
agreement providing higher electricity prices, coupled with this facility's
higher than typical operating expenses drove our impairment decision," said
Ormat CEO Dita Bronicki. "Given these circumstances, additional investment to
increase generation is not economically justified. However, we will continue
to explore ways to improve North Brawley's future cash flows to deliver value
for shareholders," added Mrs. Bronicki. "Where applicable, we have
implemented operational lessons learned from the North Brawley experience in
the development of new projects brought on-line in the last two years, thus
improving our ability to develop successful and profitable projects,"
concluded Mrs. Bronicki.

Separately, the company notes that it has been advised by Ormat Industries
Ltd., the company's parent entity, that the parent intends to record a
pre-tax, non-cash charge in a currently estimated amount of between $30
million and $40 million during the fourth quarter of 2012 for impairment to
the company's Jersey Valley power plant based on International Financial
Reporting Standards (IFRS). The company has independently conducted its own
impairment test for the Jersey Valley power plant in accordance with generally
accepted accounting principles (GAAP), and has concluded, based on the results
of its examination, that no impairment charge is required under GAAP with
respect to the Jersey Valley power plant.

Conference Call Details

Ormat will host a conference call to discuss the matters included in this
press release at 9 a.m. EST on Wednesday, January 23, 2013. To participate,
please dial (888) 562-3356 (U.S. and Canada) or (973) 582-2700
(international). The call will be available as a live, listen-only webcast at
www.ormat.com. The webcast can be accessed through the Webcast & Presentations
in the Investor Relations section of Ormat's website. The webcast will be
available approximately two hours after the conclusion of the live call. A
replay will be available from 12 p.m. EST on January 23, 2013 until 11:59 p.m.
EST on January 30, 2013 by dialing: (855) 859-2056 (U.S. and Canada) (404)
537-3406 (International) and enter the replay code: 92522007.

About Ormat Technologies

Ormat Technologies, Inc. is a leading geothermal company and the only
vertically-integrated company in the geothermal and recovered energy power
business. The company designs, develops, owns and operates geothermal and
recovered energy-based power plants around the world. Additionally, the
company designs, manufactures and sells geothermal and recovered energy power
units and other power-generating equipment, and provides related services. The
company has more than four decades of experience in the development of
environmentally-sound power, primarily in geothermal and recovered-energy
generation. Ormat products and systems are covered by 82 U.S. patents. Ormat
has engineered and built power plants that it currently owns or has supplied
to utilities and developers worldwide, totaling over 1,500 MW of gross
capacity. Ormat's current generating portfolio includes the following
geothermal and recovered energy-based power plants: in the United States -
Brady, Brawley, Heber, Jersey Valley, Mammoth, McGinness Hills, Ormesa, Puna,
Steamboat, Tuscarora, OREG 1, OREG 2, OREG 3, and OREG 4; in Guatemala - Zunil
and Amatitlan; in Kenya – Olkaria III; and, in Nicaragua - Momotombo.

Ormat's Safe Harbor Statement

Information provided in this press release 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 Ormat's plans, objectives and expectations for future operations and
are based upon its 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 February 29, 2012 and Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on November 8, 2012. In
addition, the amount of the impairment charge is a preliminary estimate and is
subject to a third party valuation, and a final review of the company's
management and review by Ormat's audit committee. The actual impairment charge
and the final result may be different from the preliminary estimate presented
herein.

These forward-looking statements are made only as of the date hereof, and we
undertake no obligation to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise.

Ormat Technologies Contact: Investor Relations Contact:
Dita Bronicki               Todd Fromer/ Rob Fink
CEO                         KCSA Strategic Communications
775-356-9029                212-896-1215 (Todd) /212-896-1206 (Rob)
dbronicki@ormat.com         tfromer@kcsa.com/rfink@kcsa.com



SOURCE Ormat Technologies, Inc.

Website: http://www.ormat.com
 
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