Transaction of the Year
Company revenue at the onset of the transaction of less than $50 million
Raser Technologies, Inc.
Before its turnaround in 2011, the tale
of Raser Technologies Inc. was one of
great expectations gone unfulfilled.
The company originally operated two
business segments, one focused on
producing geothermal electricity and
the other on developing technology
for alternative-fuel vehicles.
Raser’s power generation unit focused
on the production of geothermal
energy. To transform geothermal
resources into power, Raser decided to
employ a new technology from UTC
Power Systems that was promoted as
being more efficient and cheaper than
custom-built commercial turbines.
Raser relied heavily on outside
financing sources to fund its project
development activities and its day-
to-day operating needs. By early 2010
Raser’s rapid deployment strategy had
begun to demonstrate weaknesses.
Raser’s first operating plant, initially
budgeted to cost $40 million to
develop using the UTC Power Systems
technology, ultimately cost $120 million.
The many financial pressures on Raser
intensified in June 2010, when the
plant failed to pass a performance test
mandated under the secured project
financing documents between Raser
and Prudential. The failure put the
company in default of its obligation to
Prudential and had a cascading effect
throughout its capital structure.
The transaction team included
Nicholas Goodman and John Perry,
the company’s CEO and CFO,
respectively, as of 2010, and a legal
team from Hunton & Williams led by
Peter S. Partee Sr. The team pursued
multiple avenues in early 2011 to
keep the company intact, ultimately
identifying two bondholders, Linden
Advisors LP and Tenor Capital
Management Co., that believed in the
possibilities of geothermal energy.
A plan support agreement between
Raser, Prudential, Linden, and Tenor
was reached that would provide a
basis to completely restructure the
company’s balance sheet, and the
company filed Chapter 11 in April 2011.
Raser emerged from bankruptcy
with a rationalized balance sheet,
having drastically reduced its debt
load, from $112 million to about $6
million. Now called Cyrq Energy, the
company has the support of ownership
committed to its mission and with
the financial wherewithal to back it.
It is now virtually debt and lien free,
and has obtained financing for the
development of its two major plants.
The company now has the ability to
develop other promising projects.
The turnaround at Raser was so
complete that the company has now
become a consolidator of the industry.
It is in advanced negotiations to acquire
a former competitor and continues to
seek out other potential opportunities.
From left to right: TMA Chairman
Mark S. Indelicato; Peter S. Partee Sr.,
Hunton & Williams LLP; and Michael
G. Wilson, Hunton & Williams LLP; and
TMA President Ronald R. Sussman