Calpine cannot draw on DIP revolver to make second-lien debt adequate protection payments

By Caroline Salls

Pittsburgh, Jan. 16 - Calpine Corp.'s cash collateral use order was amended to clarify that the company cannot draw on its $1 billion revolving credit facility under its debtor-in-possession financing to make any adequate protection payments on its second-lien debt, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the filing, in order for Calpine to make any adequate protection payment under the cash collateral order, the revolver must have a zero balance after making the payment; provided, however, that the company's letter-of-credit facilities need not have a zero balance.

The court said Calpine can use its unrestricted cash to make adequate protection payments, subject to a $10 million cushion and a zero balance on the revolver; provided, however, that Calpine can attempt to upstream cash from its direct and indirect subsidiaries to meet its net corporate liquidity requirement.

As previously reported, Calpine will pay the debtholders $100.26 million in adequate protection payments for 2006 in four equal quarterly installments on March 31, 2007, June 30, 2007, Sept. 30, 2007 and Dec. 31, 2007.

In addition, Calpine will make 2007 adequate protection payments according to an agreed-upon schedule.

Calpine, a San Jose, Calif.-based power company, filed for bankruptcy on Dec. 20, 2005. Its Chapter 11 case number is 05-60200.

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