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, announced a corporate reorganization and strategic initiatives to enhance long term cash flow and shareholder value.
In January 2013, the Board of Directors (the “Board”) requested the Special Committee composed of the independent directors to conduct an extensive review of its current corporate structure with a focus on maximizing long-term cash flow. The Board, based on the recommendations of the Special Committee, approved a series of actions as follows:
The Company will conduct a reorganization of its corporate office in Reno, Nevada, reducing both expenses and staffing levels to better align the organization to focus primarily on its Nicaragua operations including the continuing operation of the San Jacinto resource, the development of a binary unit at San Jacinto, and the exploitation of its Casita resource. The corporate reorganization will take place during the current quarter. The reorganization is expected to save approximately $4 million a year annually in corporate administrative cash expense or approximately 50% of the Company’s current forecast for 2013 and 2014. After severance and other costs, the Company expects that the net impact of the reorganization in 2013 will be a savings of approximately $3 million.
In addition to the reduction in general staff at the Company’s head office, Acting CFO Selby “Bud” Little’s contract service agreement with the Company will not be renewed following its expiration on March 31, 2013 and current Chief Executive Officer and Director Shuman Moore will resign from the Company and the Board effective February 15, 2013. Antony Mitchell will continue as Executive Chairman and will remain the senior executive of the company. Further, Jose Antonio Rodriguez, Vice President, Operations and Chief Operating Officer of Latin America, who has played a key role in the San Jacinto operations over the past 24 months, will assume a more active role in establishing the strategic focus for our future development efforts in Nicaragua. Mr. Rodriguez has 18 years of experience in a number of senior management positions focused in developing and operating geothermal plants in Central America, and the Company will be utilizing this experience to further enhance the operations and profitability of our Nicaragua assets.
Antony Mitchell, Ram Power’s Executive Chairman, stated, “Shuman Moore came to Ram Power at a very challenging time. His management and international business skills, geothermal knowledge and project execution experience were exactly what was needed to get the Company’s flagship Nicaraguan project, consisting of two 36MW units, built and in service on time and on budget. With all his objectives accomplished, and in alignment with the Company’s revised corporate strategy, Mr. Moore will be returning to his previous energy consulting business in mid-February. We wish Shuman every success in his future endeavors.”
- Geysers Project -The Company’s Special Committee, with its strategic advisors, has been evaluating various strategic directions for the 26 MW (net) Geysers Project over the last several months. As a result of the analysis, the Company has decided to either joint venture or sell the Geysers Project to a third party with the objective of maximizing the value to our shareholders and increasing the Company’s corporate cash reserves.
The Company is currently evaluating potential third party partners/buyers for the Geysers Project.
- Corporate Credit Facility – The Company through its Special Committee has commenced discussions with its investment advisors to initiate efforts to re-finance the Company’s $50 million Corporate Credit Facility (the“Credit Facility”). The primary objectives in our re-financing efforts for the Credit Facility are to convert the facility into a longer term loan with a significant reduction in the Company’s annual interest expense.
Antony Mitchell, Ram Power’s Executive Chairman, stated, “While it is always challenging to reduce staffing, the Company’s goal was not a given number of job reductions, but rather the elimination of duplicating efforts in Reno, and at our subsidiary level in Nicaragua,” added Mr. Mitchell. “The Company will become leaner, and more efficient in its support of the development of projects in Central America while safeguarding expenses and risks, thereby delivering long-term value for shareholders.” Mr. Mitchell further commented that the combination of the reduced expenses from the corporate reorganization and the anticipated cash improvements from the strategic initiatives will significantly improve the Company’s balance sheet.”
Ram Power is a renewable energy company based in Reno, Nevada, engaged in the business of acquiring, exploring, developing, and operating geothermal properties, and has interests in geothermal projects in the United States, Canada, and Latin America.
This news release contains certain “forward-looking information” which may include, but is not limited to, statements with respect to future events or future performance, management’s expectations regarding the Company’s growth, results of operations, estimated future revenues, requirements for additional capital, revenue and production costs, future demand for and prices of electricity, business prospects and opportunities. In addition, statements relating to estimates of recoverable geothermal energy “reserves” or “resources” or energy generation are forward-looking information, as they involve implied assessment, based on certain estimates and assumptions, that the geothermal resources and reserves described can be profitably produced in the future. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “predicts”, “intends”, “targets”, “aims”,“anticipates” or “believes” or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. A number of known and unknown risks, uncertainties and other factors may cause the actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current geothermal energy production, development and/or exploration activities and the accuracy of probability simulations prepared to predict prospective geothermal resources; changes in project parameters as plans continue to be refined; possible variations of production rates; failure of plant, equipment or processes to operate as anticipated; accidents, labor disputes and other risks of the geothermal industry; political instability or insurrection or war; labor force availability and turnover; delays in obtaining governmental approvals or in the completion of development or construction activities or in the commencement of operations; as well as those factors discussed in the section entitled “Risk Factors” in the Company’s Annual Information Form. These factors should be considered carefully and readers of this news release should not place undue reliance on forward-looking information.
Although the forward-looking information contained in this news release is based upon what management believes to be reasonable assumptions, there can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Such forward-looking information is made as of the date of this news release. Other than as required by applicable securities laws, Ram Power assumes no obligation to update or revise the information contained in this news release to reflect new events or circumstances.
Source: Ram Power
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