Raser Technologies Inc. (RZ) amended its Thermo No. 1 geothermal power plant project’s financing arrangements with the senior project debt holders and the project tax-equity partner. Having faced financial constraints for the project, the company had roped in Merrill Lynch as the tax-equity partner and Prudential, the debt holder.

Under the new agreement, Raser will be the sole owner of the Thermo No. 1 project and future financing commitments from Merrill Lynch have been cancelled. Raser now plans to finance the approximately $33 million needed for completion of the project through a U.S. Treasury grant applicable to renewable energy projects under the American Recovery and Reinvestment Act of 2009. The Treasury Department is required to pay the grant proceeds within 60 days of the application being deemed complete. Also through the amendment, Raser will wholly own the Thermo No. 1 power plant.

Raser is now in the final stages of testing the fifth production well that is needed for the completion of the 10 MW Thermo No. 1geothermal plant. The company expects to operate the plant at full capacity by Feb 15, 2010. The company plans to add 40 MW annually to its capacity over the three year period 2010–2012 to bring its total geothermal power generation annualized capacity to 130 MW.

Provo, Utah based Raser Technologies, founded in 2002, functions as a geothermal power development and technology licensing company in the United States. The company operates in two segments – Power Systems, and Transportation and Industrial Technology. The Power Systems segment supplies and develops geothermal electric power generating plants and bottom-cycling operations. The Transportation and Industrial Technology segment focuses on commercializing its Symetron technology to improve the efficiency of electric motors and related components.

Raser Technologies currently has seven geothermal power projects under development three in Nevada, two in Utah, and one each in Oregon and New Mexico. We maintain our market Neutral recommendation on the shares.

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