Calpine Canadian subsidiary settlement to resolve $1.35 billion in cross-border claims

By Caroline Salls

Pittsburgh, May 15 - Calpine Corp. and some of its Canadian subsidiaries have agreed to a settlement that will resolve more than $250 million of intercompany claims asserted by Calpine in the Canadian insolvency proceedings and $1.1 billion of claims asserted in Calpine's bankruptcy case, according to a company news release.

The settlement is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York.

Also under the settlement, litigation of Calpine's objection to the "ULC1" bondholders claim will be dismissed, as will litigation filed against one of Calpine's non-debtor subsidiaries in connection with a transfer of ownership interests in the Greenfield Energy Centre being built in Ontario.

"This settlement is another major step forward in our restructuring efforts," Calpine chief executive officer Robert P. May said in the release.

"It represents a global settlement of virtually all major cross-border disputes between Calpine and its Canadian subsidiaries."

According to the release, this settlement follows Calpine's settlement reached with an informal committee of defaulted ULC1 bondholders.

That settlement will eliminate more than $8 billion of claims, representing one of the largest related groups of claims filed in Calpine's bankruptcy case.

As previously reported, under the proposed bond settlement, more than $12 billion of claims will be replaced by a single $3.5 billion claim; however, the bondholders have agreed that their actual recovery will be no greater than principal, accrued pre-petition and post-petition interest at the contract rate, plus fees.

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