NOTE

— SUBSEQUENT EVENTS

Cash dividend

March 1, 2018,

the Company

’s Board of Directors declared, approved and authorized payment of a quarterly dividend of

$11.5

million (

$0.23

per share) to all holders of the Company’s issued and outstanding shares of common stock on

March 14, 2018,

payable on

March 29, 2018.

U.S. Geothermal transaction

January 24, 2018

the Company entered into a definitive agreement to acquire U.S. Geothermal Inc. (“U.S. Geothermal”), a renewable energy company focused on the development, production and sale of electricity from geothermal energy. Under the terms of the merger agreement, holders of U.S. Geothermal common stock will receive

$5.45

per share in cash. On a fully diluted basis, including payment to U.S. Geothermal’s option holders, the Company will pay total consideration of approximately

$109.9

million. The closing of the merger is subject to customary conditions, including receipt of regulatory approvals and approval by persons holding a majority of the outstanding shares of U.S. Geothermal common stock. The transaction is expected to close in the

second

quarter of

2018.

U.S. Geothermal is currently operating geothermal power projects at Neal Hot Springs, Oregon, San Emidio, Nevada and Raft River, Idaho for a total designed net output of

MW that currently generate approximately

MW, net.

Events subsequent to original issuance of financial statements (Unaudited)

Cash dividend

May 7, 2018,

the Board declared, approved and authorized payment of a quarterly dividend of

$5.1

million (

$0.10

per share) to all holders of the Company’s issued and outstanding shares of common stock on

May 21, 2018,

payable on

May 30, 2018.

Compliance with financial covenants

In relation to covenants in certain debt facilities, which require timely filing of quarterly financial statements, the Company received waivers from each of its and its subsidiaries’ lenders as follows:

●

The Company received waivers extending the period required to file the quarterly condensed consolidated financial statements for the

three

months ended

March 31, 2018

for all debt facilities with a

May 30, 2018

filing deadline. The Company subsequently filed such financial statements within the period provided by the waivers.

●

The deeds of trust governing the Company’s series

and series

senior unsecured bonds contain a

June 14, 2018

filing deadline for the quarterly condensed consolidated financial statements for the

three

months ended

March 31, 2018.

Nevertheless, the failure to file is

not

a default under the bonds and the bonds are

not

accelerated unless a majority of bondholders votes to take action to accelerate the maturity date of the bonds, which did

not

occur prior to the late filing of the Form

-Q for the quarter ended

March 31, 2018.

However, since the ability of the bondholders to accelerate

may

trigger a cross default under certain of the Company other debt facilities, the Company received waivers of any potential cross default under those facilities.

Following the filing of such condensed consolidated financial statements and the filing of the restated consolidated financial statements for the fiscal year ended

December 31, 2017

and the restated condensed consolidated financial statements for the

second

and

third

quarters of

2017,

the Company believes that it and its subsidiaries are in compliance with the reporting covenants and all other covenants under their debt facilities.

Legal proceedings

May 21, 2018,

a motion to certify a class action was filed in the Tel Aviv District Court (Economic Division) entitled Heit vs Ormat Technologies, Inc. et al (C.A.

44366

). The motion purports that the Company and

eleven

of its officers and directors misled investors by asserting in its financial statements that it maintains effective internal controls over its accounting policies and procedures, and demands payment of

million Shekels (approximately

$26

million) to compensate persons who purchased Company shares between

August 3, 2017

and

May 13, 2018.

The Company believes that it has valid defenses under law and intends to defend itself vigorously. Pending resolution of the putative class action filed in the United States and described below, the Company intends to seek a stay of the proceedings in relation to the claim filed in the Tel Aviv District Court.

June 11, 2018,

a putative class action on behalf of alleged shareholders that purchased or acquired the Company's ordinary shares between

August 8, 2017

and

May 15, 2018

was commenced in the United States District Court for the District of Nevada against the Company and its Chief Executive Officer and Chief Financial Officer. The complaint asserts claims against all defendants pursuant to Section

(b) of the Exchange Act, as amended and Rule

10b

there under Section

(a) of the Exchange Act, as amended. The complaint alleges that the Company's Form

-K for the years ended

December 31, 2016

and

2017,

and Form

-Qs for each of the quarters in the

nine

months ended

September 30, 2017

contained material misstatements or omissions, among other things, with respect to the Company’s tax provisions and the effectiveness of its internal control over financial reporting, and that, as a result of such alleged misstatements and omissions, the plaintiffs suffered damages. The Company has

not

yet responded to the complaints. The Company believes that it has valid defenses under law and intends to defend itself vigorously.

Tungsten Mountain partnership transaction

May 17, 2018,

one

of the Company’s wholly-owned subsidiaries that indirectly owns the

MW Tungsten Mountain Geothermal power plant entered into a partnership agreement with a private investor. Under the transaction documents, the private investor acquired membership interests in the Tungsten Mountain Geothermal power plant project for an initial purchase price of approximately

$33.4

million and for which it will pay additional installments that are expected to amount to approximately

$13

million. The Company will continue to operate and maintain the power plant and will receive substantially all the distributable cash flow generated by the power plant.

Puna

May 3, 2018,

the Kilauea volcano located in close proximity to the Company’s

MW Puna geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area. While the Company has taken steps to secure the Puna facilities, including, among others, taking electricity generation offline and placing physical barriers around, and protective coverings over, the geothermal wells, and has evacuated non-essential personnel at the power plant and removed all pentane from the site, it is still assessing the impact of the volcanic eruption and seismic activity on the Puna facilities. The approaching lava covered the wellheads of

three

geothermal wells and the substation of the Puna complex and an adjacent warehouse that stored a drilling rig were burned due to the approaching lava. The damages are expected to be covered by the Company’s insurance policies. The net book value of the Puna property, plant and equipment is approximately

$109

million. The Company cannot currently estimate when the lava flow will stop nor when it will be able to assess all of the damages. Any significant physical damage to, or extended shut-down of, the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on the Company’s business and results of operations. The Company continues to monitor the condition of the Puna facilities, coordinate with HELCO and local authorities, and is taking steps to both further secure the power plant and restore its operations as soon as it is safe to do so. In addition, the Company will be assessing the accounting implications of this event on the assets and liabilities on its balance sheet and whether an impairment will be required.

Platanares loan

April 30, 2018

the Company, through its wholly owned subsidiary, and the Overseas Private Investment Corporation (“OPIC”), an agency of the United States Government, signed a finance agreement for non-recourse project financing totaling up to

$124.7

million for the

MW Platanares geothermal power plant in Honduras. The loan

may

be funded to Platanares in up to

three

total disbursements and will have a final maturity of approximately

years. Closing and disbursements of the loan are subject to customary conditions for funding, which the Company expects to satisfy by the end of the

second

quarter of

2018.

Upon closing, the interest rate on the loan will be determined, and is expected to be between

6.75%

and

7.25%

based on the current estimates for U.S. Treasury and for the additional spread on OPIC certificates of participation.

U.S. Geothermal transaction

April 24, 2018,

the Company completed its previously announced acquisition of USG. The total cash consideration (exclusive of transaction expenses) was approximately

$110

million, comprised of approximately

$106

million funded from available cash of Ormat Nevada Inc. (to acquire the outstanding shares of common stock of USG) and approximately

million funded from available cash of USG (to cash-settle outstanding in-the-money options for common stock of USG). As a result of the acquisition, USG became an indirect wholly owned subsidiary of Ormat, and Ormat indirectly acquired, among other things, interests held by USG and its subsidiaries in:

●

three

operating power plants at Neal Hot Springs, Oregon, San Emidio, Nevada and Raft River, Idaho with a total net generating capacity of approximately

MW; and

●

development assets which include a project at the Geysers, California; a

second

phase project at San Emidio, Nevada; a greenfield project in Crescent Valley, Nevada; and the El Ceibillo project located near Guatemala City, Guatemala.

The Company accounted for the transaction in accordance with ASC

805,

Business Combinations and following the transaction, the Company consolidates USG in accordance with ASC

810,

Consolidation. Accounting guidance provides that the allocation of the purchase price

may

be modified for up to

one

year from the date of the acquisition to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The Company expects that the adoption of ASU

2017

01,

Business Combinations, as further described under Note

to the consolidated financial statements, would

not

have an effect on the U.S. Geothermal transaction.

The Company deemed the transaction to

not

meet the significant subsidiary threshold and as a result did

not

provide additional pro-forma and other related information, that otherwise would have been required.

Migdal Senior Unsecured Loan

March 22, 2018

the Company entered into a definitive loan agreement (the "Migdal Loan Agreement") with Migdal Insurance Company Ltd., Migdal Makefet Pension and Provident Funds Ltd. and Yozma Pension Fund of Self Employed Ltd., all entities within the Migdal Group, a leading insurance company and institutional investor in Israel. The Migdal Loan Agreement provides for a loan by the lenders to the Company in an aggregate principal amount of

$100

million (the “Migdal Loan”). The Migdal Loan will be repaid in

semi-annual payments of

$4.2

million each, commencing on

September 15, 2021,

with a final payment of

$37

million on

March 15, 2029.

The Migdal Loan bears interest at a fixed rate of

4.8%

per annum, payable semi-annually, subject to adjustment in certain circumstances as described below.

The Loan is subject to early redemption by the Company prior to maturity from time to time (but

not

more frequently than once per quarter) and at any time in whole or in part, at a redemption price set forth in the Migdal Loan Agreement. If the rating of the Company is downgraded to "ilA-", by Standard and Poor’s Global Ratings Maalot Ltd. (“Maalot”), the interest rate applicable to the Migdal Loan will be increased by

0.50%.

If the rating of the Company is further downgraded to a lower level, the interest rate applicable to the Migdal Loan will be increased by

0.25%

for each additional downgrade. In

event will the cumulative increase in the interest rate applicable to the Loan exceed

regardless of the cumulative rating downgrade. A subsequent upgrade or reinstatement of a rating by Maalot will reduce the interest rate applicable to the Migdal Loan by

0.25%

for each upgrade (but in

event will the interest rate applicable the Migdal Loan fall below the base interest rate of

4.8%

). Additionally, if the ratio between short-term and long-term debt to financial institutions and bondholders, deducting cash and cash equivalents to EBITDA is equal to or higher than

4.5,

the interest rate on all amounts then outstanding under the Migdal Loan shall be increased by

0.5%

per annum over the interest rate then-applicable to the Migdal Loan.

The Migdal Loan constitutes senior unsecured indebtedness of the Company and will rank equally in right of payment with any existing and future senior unsecured indebtedness of the Company, and effectively junior to any existing and future secured indebtedness, to the extent of the security therefore.

The Migdal Loan Agreement includes various affirmative and negative covenants, including a covenant that the Company maintain (i) a debt to adjusted EBITDA ratio below

(ii) a minimum equity amount (as shown on its consolidated financial statements, excluding noncontrolling interests) of

not

less than

$650

million, and (iii) an equity attributable to Company's stockholders to total assets ratio of

not

less than

25%.

In addition, the Migdal Loan Agreement restricts the Company from making dividend payments if its equity falls below

$800

million and otherwise restricts dividend payments in any

one

year to

not

more than

50%

of the net income of the Company of such year as shown on the Company’s consolidated annual financial statements as long as any of the Company's bonds issued in Israel prior to

March 27, 2018

remain outstanding. The Migdal Loan Agreement includes other customary affirmative and negative covenants and events of default.