S&P: Calpine offering favorable

Standard & Poor's said it views Calpine Corp.'s (B/negative/--) proposed $260 million offering of redeemable preferred shares in Calpine European Funding (Jersey) Ltd. as favorable for the company's credit quality.

S&P said the offering would add near-term liquidity to Calpine's balance sheet in anticipation of a potential sale of the 1,200 MW Saltend Energy Centre.

The proceeds from the offering will initially be loaned to a holding company, which indirectly owns Calpine's Saltend cogeneration power plant. The net proceeds will ultimately be used as permitted by Calpine's existing bond indentures. Net proceeds from the potential sale of the facility would be used to first redeem the existing $360 million two-year redeemable preferred shares and to redeem the $260 million redeemable preferred shares.

Any remaining proceeds would be used in accordance with the asset sale provisions of Calpine's existing bond indentures.

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