OESI RESPONDS TO DROP IN STOCK PRICE
OESI RESPONDS TO DROP IN STOCK PRICE SPARKS, Nev., Nov. 22 /PRNewswire/ -- OESI Power Corp.
(NASDAQ: OESI) responded to the drop in its stock price and the subsequent trading halt on Thursday, Nov. 21. The company asked that trading be stopped after its share price dropped from $9.50 to $6.50 on volume of approximately 30,000 shares.
The company stated that the unusual market activity on Thursday was the result of investor concern about the status of the company's Puna I project and other matters set forth in its third quarter Form 10-Q. As stated in the company's recently filed 10-Q, the Puna I project being constructed by its Puna Geothermal Venture ("PGV") has experienced cost overruns. Construction expenditures for the project, originally anticipated to cost $100 million, are now expected to total $124 million upon completion. The majority of the $24 million overrun stems directly from the uncontrolled steam release on June 12, 1991 from its KS-8 well. Approximately one-half of the total, or $12 million, stems from additional geothermal field costs. The geothermal resource contained much higher pressure steam than originally anticipated, resulting in more expensive drilling procedures and well-head equipment. The remaining $12 million of cost overruns is comprised of a series of other items which include: costs incurred in controlling the well not covered by insurance, the loss of energy revenues created by the delay in the project, costs incurred in building a back-up transmission line, as well as a series of carrying costs, including interest expense. Before resuming the final stages of field development for the project, PGV must meet all the conditions outlined in the Island of Hawaii's Geothermal Management Plan ("GMP"). The GMP, in essence, outlines steps required for the further development of the project and includes such items as drilling procedures and air and noise emission standards. To date, the company has submitted all requested data. Although the company cannot predict with certainty when a decision will be made or that it will be favorable, the company believes it has met all the requirements for reinstatement and is anticipating the reinstatement of the drilling permits. Upon receipt of the permit, the company expects to use the remaining $6.6 million of proceeds available under its $100 million construction loan agreement with Credit Suisse. Advances under the loan have been suspended since August pending the reinstatement of the drilling permits, of which one remains. Of the $24 million expected overrun, roughly $6.4 million has already been funded by the partners in the project. Constellation Energy Inc., a wholly owned subsidiary of Baltimore Gas & Electric, which holds a 49 percent interest in the project, has funded $3.2 million to date and the company has also funded $3.2 million. Of the remaining $17.5 million, approximately $10 million will be funded by Constellation Energy in exchange for certain tax considerations made available by PGV. The final $7.6 million will be funded by both partners, with Constellation contributing $3.7 million and the company contributing $3.9 million, which $3.9 million will be funded pursuant to an agreement between the company and Constellation until other financing is arranged. The company has taken several steps over the last several months to address its cash flow requirements and expects to complete a $25 million revolving credit agreement with a money center bank that will provide funds for development, project equity, letters of credit or general corporate purposes. Based on the company's estimate of its current borrowing base (which does not include all of its projects), the credit agreement would provide up to $10 million in current additional funding. The company anticipates completion of this agreement by mid-December. OESI Power Corp. acquires, develops, operates and sells interests in geothermal power projects in the Western United States, Alaska and Hawaii. -0- 11/22/91 /CONTACT: Patrick MacMullen of OESI Power, 702-355-5666/ (OESI) CO: OESI Power Corp.; Constellation Energy Inc. ST: Nevada IN: SU:
AL -- LA010 -- 6420 11/22/91 13:23 EST
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|Date:||Nov 22, 1991|
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