Calpine reaches settlement to resolve ULC2 bond claims disputes

By Caroline Salls

Pittsburgh, Nov. 16 - Calpine Corp. requested court approval of a claims settlement with the indenture trustee for the company's ULC2 bonds and Calpine Canada Energy Finance II ULC's informal creditors committee, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The ULC2 senior unsecured notes issued in October 2001 are fully guaranteed by Calpine.

According to the motion, under the terms of the ULC1 claims settlement, which was approved in July, the ULC2 indenture trustee received a $361.66 million unsecured claim against Calpine in connection with the guarantee agreement, as well as a general unsecured claim in the Companies' Creditors Arrangement Act case of some of Calpine's Canadian subsidiaries for the outstanding principal of the ULC2 notes, plus interest and fees and expenses.

Calpine said some of these claims were later resolved under a Canadian court order, and the remaining claims covered under the ULC2 settlement include informal committee fee claims, indenture trustee dispute interest claims, a make-whole premium claim and a fee claim in connection with costs accrued in a Harbert Distressed Investment Master Fund, Ltd. lawsuit.

Under the ULC2 settlement:

• The indenture trustee, on behalf of the ULC2 bondholders, will have a $17.39 million general unsecured claim in the CCAA proceedings on account of the make-whole premium, plus interest;

• The informal committee will have an $8.15 million general unsecured claim in the CCAA proceedings on account of a committee fees claim and the Harbert lawsuit fees claim;

• The indenture trustee's remaining claims in the CCAA and U.S. bankruptcy cases will be withdrawn; and

• The Harbert lawsuit will be dismissed on a no-cast basis.

A hearing is scheduled for Dec. 6.

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

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