XML 24 R13.htm IDEA: XBRL DOCUMENT

Note 5 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 5— FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received upon selling an asset or paid upon transferring a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth certain fair value information at September 30, 2021 and December 31, 2020 for financial assets and liabilities measured at fair value by level within the fair value hierarchy, as well as cost or amortized cost. As required by the fair value measurement guidance, assets and liabilities are classified in their entirety based on the lowest level of inputs that is significant to the fair value measurement.

						September 30, 2021
						Fair Value
		Carrying Value at September 30, 2021				Total				Level 1				Level 2				Level 3
		(Dollars in thousands)
Assets:
Current assets:
Cash equivalents (including restricted cash accounts)		$	30,052			$	30,052			$	30,052			$	—			$	—
Marketable securities (including cash equivalents)			45,479				45,479				45,479				—				—
Derivatives:
Currency forward contracts ⁽²⁾			441				441				—				441				—
Long-term Assets:
Cross currency swap ⁽³⁾			19,240				19,240				—				19,240				—
Liabilities:
Current liabilities:
Derivatives:
Cross currency swap ⁽³⁾			(235	)			(235	)			—				(235	)			—
Long term liabilities:
Contingent payables ⁽¹⁾			(2,493	)			(2,493	)			—				—				(2,493	)
		$	92,484			$	92,484			$	75,531			$	19,446			$	(2,493	)

						December 31, 2020
						Fair Value
		Carrying Value at December 31, 2020				Total				Level 1				Level 2				Level 3
		(Dollars in thousands)
Assets
Current assets:
Cash equivalents (including restricted cash accounts)		$	28,653			$	28,653			$	28,653			$	—			$	—
Derivatives:
Contingent receivables ⁽¹⁾			111				111				—				—				111
Currency forward contracts ⁽²⁾			1,554				1,554				—				1,554				—
Long-term assets:
Cross currency swap ⁽³⁾			27,829				27,829				—				27,829				—
Liabilities:
Current liabilities:
Derivatives:
Contingent payables ⁽¹⁾			(549	)			(549	)			—				—				(549	)
Cross currency swap ⁽³⁾			(2,283	)			(2,283	)			—				(2,283	)			—
Long-term liabilities:
Contingent payables ⁽¹⁾			(2,630	)			(2,630	)			—				—				(2,630	)
		$	52,685			$	52,685			$	28,653			$	27,100			$	(3,068	)

1.

These amounts relate to contingent receivables and payables and warrants pertaining to the Guadeloupe power plant purchase transaction, valued primarily based on unobservable inputs and are included within “Prepaid expenses and other”, “Accounts payable and accrued expenses” and “Other long-term liabilities” on September 30, 2021 and December 31, 2020, as applicable, in the condensed consolidated balance sheets with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the condensed consolidated statements of operations and comprehensive income.

2.

These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within “Receivables, other” on September 30, 2021 and December 31, 2020, in the condensed consolidated balance sheets with the corresponding gain or loss being recognized within “Derivatives and foreign currency transaction gains (losses)” in the condensed consolidated statements of operations and comprehensive income.

3.

These amounts relate to cross currency swap contracts valued primarily based on the present value of the cross currency swap future settlement prices for U.S. Dollar ("USD") and New Israeli Shekel ("NIS") zero yield curves and the applicable exchange rate as of September 30, 2021 and December 31, 2020, as applicable. These amounts are included within “Deposits and other” and "Accounts payable and accrued expenses", as applicable, on September 30, 2021 and December 31, 2020 in the condensed consolidated balance sheets. There are no cash collateral deposits on September 30, 2021 and December 31, 2020.

The following table presents the amounts of gain (loss) recognized in the consolidated statements of operations and comprehensive income on derivative instruments (in thousands):

				Amount of recognized gain (loss)								Amount of recognized gain (loss)
Derivatives not designated as hedging instruments		Location of recognized gain (loss)		Three Months Ended September 30,								Nine Months Ended September 30,
				2021				2020				2021				2020
				(Dollars in thousands)								(Dollars in thousands)
Swap transaction on RRS prices ⁽¹⁾		Derivative and foreign currency transaction gains (losses)		$	—			$	—				(14,540	)			—
Currency forward contracts ⁽¹⁾		Derivative and foreign currency transaction gains (losses)		$	387			$	424			$	118			$	2,949

Derivatives designated as cash flow hedging instruments

Cross currency swap ⁽²⁾		Derivative and foreign currency transaction gains (losses)		$	2,945			$	758			$	(1,349	)		$	758

⁽¹⁾ The foregoing currency forward and price swap transactions were not designated as hedge transactions and were marked to market with the corresponding gains or losses recognized within “Derivatives and foreign currency transaction gains (losses)” in the condensed consolidated statements of operations and comprehensive income. The price swap transaction was related to a hedging agreement with a third party that was effective January 1, 2021 under which the Company fixed the price per MWh on a portion of RRS provided by its Rabbit Hill storage facility, as described under Note 1 to the condensed consolidated financial statements. The price swap transaction was terminated effective April 1, 2021.

⁽²⁾ The foregoing cross currency swap transactions were designated as a cash flow hedge as further described under Note 1 to the condensed consolidated financial statements. The changes in the cross currency swap fair value are initially recorded in "Other comprehensive income (loss)" and a corresponding amount is reclassified out of "Accumulated other comprehensive income (loss)" to "Derivatives and foreign currency transaction gains (losses)" to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the condensed consolidated statements of operations and comprehensive income.

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the nine months ended September 30, 2021.

The following table presents the effect of derivative instruments designated as cash flow hedges on the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2021:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
		(Dollars in thousands)								(Dollars in thousands)
Cross currency swap cash flow hedge:
Balance in Other comprehensive income (loss) beginning of period		$	766			$	—			$	3,366			$	—
Gain or (loss) recognized in Other comprehensive income (loss)			251				(2,790	)			(6,643	)			(2,790	)
Amount reclassified from Other comprehensive income (loss) into earnings			(2,945	)			(758	)			1,349				(758	)
Balance in Other comprehensive income (loss) end of period		$	(1,928	)		$	(3,548	)		$	(1,928	)		$	(3,548	)

The estimated net amount of existing gain (loss) that is reported in "Accumulated other comprehensive income (loss)" as of September 30, 2021 that is expected to be reclassified into earnings within the next 12 months is immaterial. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flow is from the transaction commencement date through June 2031.

The fair value of the Company’s long-term debt approximates its carrying amount, except for the following:

		Fair Value								Carrying Amount
		September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020
		(Dollars in millions)								(Dollars in millions)
HSBC Loan		$	57.0			$	—			$	50.0			$	—
Hapoalim Loan			128.6				—				125.0				—
Discount Loan			101.8				—				100.0				—
Finance liability - Dixie Valley			252.2				—				252.9				—
Olkaria III Loan - DFC			173.9				192.5				161.2				174.7
Olkaria III plant 4 Loan - DEG 2			37.6				40.4				35.0				37.5
Olkaria III plant 1 Loan - DEG 3			33.2				35.8				30.6				32.8
Platanares Loan - DFC			102.2				112.1				90.1				96.3
Amatitlan Loan			20.8				23.5				20.1				22.8
Senior Secured Notes:
OFC 2 LLC ("OFC 2")			190.8				207.9				177.4				188.2
Don A. Campbell 1 ("DAC 1")			72.4				78.5				69.3				73.1
USG Prudential - NV			29.8				31.8				26.8				27.6
USG Prudential - ID			17.1				18.3				17.5				18.4
USG DOE			40.5				45.1				35.4				38.2
Senior Unsecured Bonds			572.1				585.1				527.7				529.1
Senior Unsecured Loan			206.2				222.2				191.6				200.0
Plumstriker			16.3				18.1				16.2				18.1
Other long-term debt			14.5				17.4				14.8				17.6

The fair value of the long-term debt is determined by a valuation model, which is based on a conventional discounted cash flow methodology and utilizes assumptions of current borrowing rates. The fair value of revolving lines of credit is determined using a comparison of market-based price sources that are reflective of similar credit ratings to those of the Company.

As disclosed above under Note 1 to the condensed consolidated financial statements, the outbreak of the COVID-19 pandemic has resulted in a global economic downturn and market volatility that may have an impact on the estimated fair value of the Company's long-term debt as the global economic situation evolves.

The carrying value of revolving lines of credit and deposits approximates fair value.

The following table presents the fair value of financial instruments as of September 30, 2021:

		Level 1				Level 2				Level 3				Total
		(Dollars in millions)
HSBC Loan		$	—			$	—			$	57.0			$	57.0
Hapoalim Loan			—				—				128.6				128.6
Discount Loan			—				—				101.8				101.8
Finance liability - Dixie Valley			—				—				252.2				252.2
Olkaria III Loan - DFC			—				—				173.9				173.9
Olkaria III plant 4 Loan - DEG 2			—				—				37.6				37.6
Olkaria III plant 1 Loan - DEG 3			—				—				33.2				33.2
Platanares Loan - DFC			—				—				102.2				102.2
Amatitlan Loan			—				20.8				—				20.8
Senior Secured Notes:
OFC 2 Senior Secured Notes			—				—				190.8				190.8
DAC 1 Senior Secured Notes			—				—				72.4				72.4
USG Prudential - NV			—				—				29.8				29.8
USG Prudential - ID			—				—				17.1				17.1
USG DOE			—				—				40.5				40.5
Senior Unsecured Bonds			—				—				572.1				572.1
Senior Unsecured Loan			—				—				206.2				206.2
Plumstriker			—				16.3				—				16.3
Other long-term debt			—				—				14.5				14.5
Deposits			17.1				—				—				17.1

The following table presents the fair value of financial instruments as of December 31, 2020:

		Level 1				Level 2				Level 3				Total
		(Dollars in millions)
Olkaria III Loan - DFC		$	—			$	—			$	192.5			$	192.5
Olkaria IV - DEG 2			—				—				40.4				40.4
Olkaria IV - DEG 3			—				—				35.8				35.8
Platanares Loan - DFC			—				—				112.1				112.1
Amatitlan Loan			—				23.5				—				23.5
Senior Secured Notes:
OFC 2 Senior Secured Notes			—				—				207.9				207.9
DAC 1 Senior Secured Notes			—				—				78.5				78.5
USG Prudential - NV			—				—				31.8				31.8
USG Prudential - ID			—				—				18.3				18.3
USG DOE			—				—				45.1				45.1
Senior Unsecured Bonds			—				—				585.1				585.1
Senior Unsecured Loan			—				—				222.2				222.2
Plumstriker			—				18.1				—				18.1
Other long-term debt			—				—				17.4				17.4
Deposits			14.8				—				—				14.8

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details