Calpine starts talks on refinancing revolver, construction facility due 2003

By Peter Heap

New York, Nov. 5 - Calpine Corp. said it began discussions on refinancing its $1 billion of revolving credit facilities and $1 billion of its construction facilities at a meeting with some of its bank lenders last week.

"The basic plan we outlined to lenders proposes extending the revolver out two years to May 2005 and a refinancing plan to start repaying CCFC I in early 2003," Calpine's chief financial officer Bob Kelly said during the company's earnings conference call Tuesday. CCFC I is one of the San Jose, Calif. energy company's two construction facilities and is a $1 billion line due October 2003.

The revolver - made up of two parts - matures in March 2003 although there is an option to extend $600 million of letter of credit availability by one year to May 2004. CCFC I has a one-year extension option but Kelly said it was of little value since any single bank lender can block exercise.

"Early feedback was very positive - but the process has just started," Kelly commented on the discussions at last week's meeting.

Calpine is hoping to announce a refinancing plan with agreement from all its banks during the first quarter of 2003, Kelly added.

Both parts of the revolver and the construction facility are secured.

Kelly also said the Calpine aims to have $1.2 to $1.4 billion of cash at the end of the year, assuming asset sales go through as planned.

This figure comes from $660 million of cash, $155 million of revolver availability, $75 to $100 million of cash from operations after lease and interest payments and $1.7 billion from transactions such as asset sales, peaker leases and contract monetizations for a total of $2.6 billion of sources of cash.

Counstruction and equipment capital expenditures will use $700 to $800 million, operations will use $50 million and debt retirements will use $1.4 billion since Calpine will receive payment in bonds on some of the transactions.

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