Raser Technologies (RZ) Makes Debt Payment, Considers Selling Interest In Thermo 1

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12:07:21 pm on July 13, 2010

Raser Technologies (RZ) has agreed to pay $27 million to the lender that provided the financing for the Thermo 1 geothermal power plant right away along with another $6 million within the next year.  In exchange, the lender will waive compliance with applicable debt related covenants and obligations for the next year.

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As part of the process to establish the value of the company portfolio, Raser may sell all or a portion of the Thermo 1 plant or raise additional cash from other other sources.  CEO Nick Goodman commented that larger generators at Thermo 1 could increase output by at least 50%, but  instead of upgrading the generators themselves with money they don’t have, they would consider selling an equity interest in Thermo 1, while maintaining ownership in the remaining Thermo field which apparently has the potential to produce and additional 150 – 200MW of geothermal power.

“If we are able to sell our interests in Thermo No. 1 to a third party with the capital to upgrade the generators at the Thermo No. 1 project, we believe it will further validate the larger Thermo area, demonstrating the viability of the Thermo area resource for additional power plant,” said Mr. Goodman.

With shares of RZ trading at just above half a buck, you have to decide if it’s a good lotto ticket play down here.   It’s up 8% today, but this is a company with many more questions than answers.  I think US Geothermal (HTM) may be the better lotto ticket at .80/share than RZ is at .55/share.   For those looking for more of a sure thing in the geothermal space, Ormat (ORA) is looking mighty compelling down around $29.

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