Item
1.01 Entry into a Material Definitive Agreement
Indenture
On June 27, 2022, Ormat Technologies, Inc. (the “Company”)
entered into an indenture (the “Indenture”), with U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
Pursuant to the Indenture, the Company issued $375 million in aggregate principal amount of 2.50% Senior Convertible Notes due 2027 (the
“Notes”). The Notes bear interest at a rate of 2.50% per year, payable on January 15 and July 15 of each year, beginning on
January 15, 2023. The Notes will mature on July 15, 2027, unless earlier redeemed, converted or repurchased.
The Notes are convertible into cash up to the aggregate principal amount
of the Notes to be converted and cash, shares of the Company’s common stock (“Common Stock”) or a combination of cash
and shares of Common Stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation
in excess of the aggregate principal amount of the Notes being converted, at an initial conversion rate of 11.0776 shares of Common Stock
per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $90.27 per share of Common Stock). The
conversion rate, and thus the conversion price, may be adjusted under certain circumstances, including in connection with conversions
made following a fundamental change or a redemption notice and under other circumstances, in each case as set forth in the Indenture.
Prior to 5:00 p.m., New York City time, on the business day immediately
preceding January 15, 2027, the Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing
after the calendar quarter ending on September 30, 2022 (and only during such calendar quarter), if the last reported sale price of the
Common Stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and
including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price
on each applicable trading day; (2) during the five consecutive business day period immediately after any five consecutive trading day
period (the “measurement period”) in which the “trading price” per $1,000 principal amount of Notes, as determined
following a request by a holder or holders of Notes in accordance with the procedures described in the Indenture, for each trading day
of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate
on each such trading day; (3) if the Company calls any or all of the Notes for redemption, at any time prior to the close of business
on the second scheduled trading day prior to the redemption date (as defined in the Indenture), but only with respect to the Notes called
(or deemed called as set forth in the Indenture) for redemption; or (4) upon the occurrence of specified corporate events as described
in the Indenture. On or after January 15, 2027 until the close of business on the second scheduled trading day immediately preceding
the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time irrespective of the foregoing
conditions.
The Company may not redeem the Notes prior to July 21, 2025. The Company
may redeem for cash all or any portion of the Notes, at the Company’s option, on or after July 21, 2025 and on or before the 41st
scheduled trading day immediately preceding the maturity date, if the last reported sale price of the Common Stock has been at least 130%
of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day
period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which
the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus
any accrued and unpaid interest to, but excluding the redemption date. No sinking fund is provided for the Notes.
If a fundamental change (as defined in the Indenture) occurs (other
than an exempted fundamental change, as defined in the Indenture), holders may require the Company to repurchase for cash all or any portion
of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and
unpaid interest to, but excluding, the fundamental change repurchase date.
The
Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness
that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of the Company’s unsecured indebtedness
that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent
of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade
payables but excluding intercompany obligations and liabilities of a type not required to be reflected on a balance sheet of such subsidiaries
in accordance with GAAP) of the Company’s subsidiaries.
The events of default, which may result in the acceleration of the
maturity of the Notes, include, among other things, (i) failure to pay the principal amount of the Notes when due at maturity, upon an
optional redemption, upon any required repurchase following a fundamental change or upon declaration of acceleration of the Notes or otherwise,
(ii) failure to pay interest on the Notes when due and the continuance of such default for a period of 30 days, (iii) failure by the Company
to comply with its other obligations under the Notes or the Indenture for a period of 60 days after written notice from the Trustee or
the holders of at least 25% in aggregate principal amount of the Notes then outstanding, (iv) failure to pay when due any indebtedness
for borrowed money of the Company or any of the Company’s “significant subsidiaries” (as defined in Article 1, Rule
1-02(w) of Regulation S-X) in excess of $100 million and (v) certain events of bankruptcy, insolvency or reorganization involving the
Company or any significant subsidiary.
If an event of default involving bankruptcy, insolvency or reorganization
occurs and is continuing with respect to the Company, 100% of the principal amount of the Notes then outstanding and accrued and unpaid
interest, if any, on the outstanding Notes will be automatically due and payable. If any other event of default occurs and is continuing,
the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes, by written notice to the Company,
may declare 100% of the principal amount of the Notes then outstanding and accrued and unpaid interest, if any, on the outstanding Notes
to be due and payable.
The
Company estimates that the net proceeds from the offering of the Notes will be approximately $364.9 million after deducting fees and
estimated offering expenses.
The Company used (1) approximately $18.0 million of the net proceeds
from the sale of the Notes to repurchase, concurrently with the closing of the offering, shares of the Common Stock in privately negotiated
transactions at a price of $69.45 per share, (2) approximately $21.3 million of the net proceeds to pay the cost of the capped call transactions
described below, (3) approximately $221.9 million to fund the previously announced prepayment of the Company’s Series 3 Bonds, and
accrued but unpaid interest thereon, and make-whole payments, and (4) the remainder for general corporate purposes.
The
Company has also granted the initial purchasers (as defined in the Indenture) of the Notes an option to purchase, for settlement
within a 13-day period beginning on, and including the date on which the Notes are first issued, up to an additional $56.25 million
aggregate principal amount of Notes. The initial purchasers have elected to exercise their option to purchase additional Notes in
full, and the purchase of additional Notes is expected to be completed on June 29, 2022, subject to customary closing conditions.
The Company expects to use approximately $3.2 million of the net proceeds from the sale of the additional Notes to enter into
additional capped call transactions with the Counterparties (as defined below) and the remaining net proceeds for general corporate
purposes.
The
description of the Indenture and the Notes is qualified in its entirety by reference to the text of the Indenture, and the related form
of Note, which are attached as Exhibit 4.1 and Exhibit 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein
by reference.
Capped
Call Confirmations
On June 22, 2022, concurrently with the pricing
of the Notes, the Company entered into capped call transactions with Bank of Montreal (with BMO Capital Markets Corp. acting as agent),
Credit Suisse Capital LLC (with Credit Suisse Securities (USA) LLC acting as agent), Goldman Sachs & Co. LLC and Mizuho Markets Americas
LLC (with Mizuho Securities USA LLC acting as agent) (collectively, the “Counterparties”). The capped call transactions are
expected generally to reduce the potential dilution to the Common Stock upon any conversion of Notes and/or offset any cash payments
the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or
offset subject to a cap. The cap price of the capped call transactions is initially equal to approximately $107.63 per share (which represents
a premium of approximately 55% above the closing price of the Common Stock on the New York Stock Exchange on June 22, 2022). The capped
call transactions cover, subject to customary anti-dilution adjustments, the number of shares of Common Stock initially underlying the
Notes. The aggregate cost of the capped call transactions entered into on June 22, 2022 was approximately $21.3 million. The Company
expects to use approximately $3.2 million of the net proceeds from the sale of additional Notes described above to enter into additional
capped call transactions with the Counterparties.
The
capped call transactions are separate transactions entered into by the Company with the Counterparties, and are not part of the terms
of the Notes. Holders of the Notes have no rights with respect to the capped call transactions. The foregoing description of the capped
call transactions is qualified in its entirety by reference to the form of the confirmation for capped call transactions, which is attached
as Exhibit 10.1 to this report and is incorporated herein by reference.