Calpine, second-lien debtholders agree in principle to $51.84 million claim settlement

By Caroline Salls

Pittsburgh, Feb. 1 - Calpine Corp. has reached a $51.84 million agreement in principle with its unofficial committee of second-lien debtholders in settlement of the debtholders' remaining claims for payment of compound and default interest, according to a company news release.

Calpine said the settlement also covers claims for a transaction fee for the committee's financial adviser, Houlihan Lokey.

Under the settlement, which is subject to definitive documentation, the second-lien debtholders will receive their share of $51.84 million in cash in full and final satisfaction of their secured claims.

The payment will be funded through a $65 million general unsecured claim, subject to a $51.84 million cap on distributions based on Calpine's total enterprise value set in its plan of reorganization, as well as a cash payment to cover any other required funding.

The debtholders expect to assign the general unsecured claim for value, the release said. Under the agreement, the second-lien debtholders will only be allowed to keep $51.84 million under the claim assignment. Any excess will be paid to Calpine.

According to the release, the settlement will give holders of the company's 8½% notes $13.33 million more than the amount previously allowed by the bankruptcy court, holders of Calpine's 8¾% notes will receive $10.82 million more than previously allowed, holders of its 9 7/8% notes will receive $2.21 million more, holders of the company's floating-rate notes will receive $4.91 million more than previously allowed and holders of Calpine's term loan debt will receive $20.57 million more.

Calpine, a San Jose, Calif., power company, emerged from bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Jan. 31. Its Chapter 11 case number is 05-60200.

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