Raser Technologies Announces Agreement And Substantial Payment Of Thermo No. 1 Debt Obligations

Raser Technologies, Inc. (NYSE: RZ), an energy technology company, announced today that it has entered into an agreement with the senior secured lender that provided the debt financing for the Thermo No. 1 geothermal power plant to repay a substantial portion of the debt.

Under the arrangement, the lender will receive an immediate payment of $27 million out of project escrow accounts and will waive compliance with applicable debt-related covenants and obligations for the next year. In addition, Raser will make an additional payment of up to $6 million before June 29, 2011. Over the next 12 months, Raser will follow its plan to sell certain assets which will help establish the value of the Company’s portfolio. As part of this process, Raser will satisfy the remaining obligation to the Thermo lender from the sale proceeds of a part or all of its interest in Thermo No. 1 or another asset. Alternatively, Raser can satisfy this obligation using cash from other sources. After providing for the initial payment to the lender, approximately $3 million of currently escrowed funds will remain in a project escrow account to provide for the operation of the plant and other related expenses.

The Thermo No. 1 plant is currently producing a little over six megawatts of electricity that is available for sale. While this is below the original anticipated output level, several unaffiliated, geothermal equipment manufacturers have indicated to Raser that, in their judgment, significant improvement in the electrical output of Thermo No. 1 is possible. They have represented to Raser that the addition of larger, more efficient generators at the Thermo No. 1 project would enable the generation of between 9-11 megawatts of electricity, based on current geothermal flow and temperature conditions.

Nick Goodman, Raser’s CEO, commented, “Raser would need additional capital to install larger generating units at our Thermo No. 1 project. Therefore, instead of upgrading the units ourselves, we are considering the sale of equity interests in the Thermo No. 1 project while maintaining ownership in the remaining Thermo field - a resource that GeothermEx reports has the potential to produce an additional 150-200 megawatts 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 plants.”