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Calpine Geysers asks emergency approval to enter DIP agreement as guarantor to avoid default
By Caroline Salls
Pittsburgh, May 2 - Calpine Corp. debtor Calpine Geysers Co., LP asked for emergency court approval to enter into a debtor-in-possession financing agreement as guarantor to help the company avoid possible DIP defaults, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
According to the motion, Calpine only recently became aware that Calpine Geysers continued to exist and had not been dissolved or merged into debtor Anderson Springs Energy Co.
As a result, the company did not include Calpine Geysers in its Chapter 11 filing or make it part of its DIP as a guarantor.
In addition, Anderson Springs did not pledge its limited partnership interest in Calpine Geysers to the DIP lenders when it filed for Chapter 11.
Now, Calpine said the DIP lenders may attempt to say that defaults exist under the DIP agreement, with potentially devastating consequences for all of the debtors.
Calpine said any defaults can be cured or waived if Calpine Geysers becomes a guarantor party under the DIP credit agreement and Anderson Springs pledges its limited partnership interest to the lenders.
The motion said Calpine Geysers will derive benefits from the DIP financing and would not be able to continue operating without immediate access to the DIP financing.
Calpine Geysers does not generate any of its own revenues and depended on Calpine for financial support until the Chapter 11 filing.
According to the motion, Calpine Geysers no longer has funds to pay its expenses and will be forced to shut down unless it receives immediate access to the DIP proceeds.
Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20. Its Chapter 11 case number is 05-60200.
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