RENO, NV--(Marketwired - Aug 1, 2013) - Ram Power, Corp. (TSX: RPG) ("Ram Power" or the "Company"), a renewable energy company focused on the development, production and sale of electricity from geothermal energy, is pleased to announce that the Company has reached an agreement with its project lenders syndicate, led by the International Finance Corporation (the "Lenders"), to convert its Phase II Credit Facility for the San Jacinto-Tizate Project (the "Project") to a term loan.
Under the terms of the agreement, the Lenders agreed to waive the minimum steam requirement set forth in the original agreement and permit the Company to complete its resource remediation program over the next five months. While the Company will not be permitted to receive distributions until the completion of the resource remediation program, the Company will receive administrative fee payments from Project revenues of $0.5 million per month effective July 31, 2013, August 15, 2013, September 15, 2013 and October 15, 2013.
To expedite the resource remediation drilling program currently in progress, the Company funded $3 million in June 2013 to the Major Maintenance Reserve Account from Project equity. The Company has also agreed to fund from Project equity an additional $2.95 million to the Major Maintenance Reserve Account by December 15, 2013 for other potential resource remediation efforts if necessary. In conjunction with the conversion, the Company from Project equity funded $2.4 million to a reserve account to satisfy certain power purchase agreement obligations not currently met by the off-taker. Once the off-taker fulfills their guarantee requirements under the terms of the power purchase agreement, the $2.4 million will be released from the reserve account and be eligible for distribution to the Company under the Project distribution conditions.
Following the completion of the resource remediation drilling program on or before December 15, 2013, the Company will conduct a plant capacity test to be concluded no later than January 22, 2014. The test includes a 30-day stabilization period of the resource field followed by a 7-day performance test to determine the net operating output of the plant. Upon completion of the plant capacity test, the Company is eligible for distributions if it is able to meet certain debt service coverage ratios and other operational requirements.
Should the plant capacity test result in a net operating output below 55 MW (net), the Phase II Credit Facility will be in default. If the plant capacity test results in a net operating output equal to or greater than 65 MW (net), the $2.95 million Project equity deposited into to the Major Maintenance Reserve Account will be released and be eligible for distribution under the Project distribution conditions, and quarterly contributions to the Major Maintenance Reserve Account will be approximately $1 million per quarter. For net operating output results below 65 MW (net), the $2.95 million will remain in the Major Maintenance Reserve Account for future drilling efforts and quarterly Major Maintenance Contributions will increase by $0.2 million per MW for production levels below 65 MW (net). The Company has the option to re-test the plant capacity at any time and upon any re-test resulting in the plant operating at or above 65 MW (net) will result in the Major Maintenance contributions resetting to approximately $1 million per quarter.
Antony Mitchell, Executive Chairman of the Company, stated, "I would like to thank the Lenders for their continued efforts over the past several months to reach an agreement on the conversion of our construction loan to a term loan. While complex, the agreement provides for a mechanism to ensure a successful drilling program, and the flexibility to provide sufficient funds for our continued efforts to develop the steam resource. The drilling program in Nicaragua is now underway, and we look forward to successful drilling results and the subsequent increase in plant production at San Jacinto."
This press release contains "forward-looking information" within the meaning of applicable securities laws including information regarding the business of Ram Power. Readers are cautioned not to place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by this information. The statements in this press release are made as of the date of this release. Ram Power undertakes no obligation to update forward-looking information, other than as required by law, or comment on analyses, expectations or statements made by third parties in respect of Ram Power, or its financial or operating results or its securities.