Calpine obtains needed consents to amend 7 7/8%, 7½% secured notes

By Jennifer Chiou

New York, July 22 – Calpine Corp. announced that it received the necessary consents to amend its $880 million of outstanding 7 7/8% senior secured notes due 2020 and $1.6 billion of 7½% senior secured notes due 2021.

A consent solicitation and tender offer for any and all of the notes began July 8.

The company is soliciting consents to eliminate substantially all of the restrictive covenants, some events of default and related provisions in the note indentures and release the liens on the collateral securing the notes.

As of the consent deadline, 5 p.m. ET on July 21, the company had received tenders and consents from holders of $860,508,000 principal amount, or 97.79%, of the 7 7/8% notes and $1,581,580,000, or 98.85%, of the 7½% notes.

Calpine said it has accepted these notes for purchase.

As previously reported, the tender offer will end at midnight ET on Aug. 4.

The Houston-based power company also said it will to redeem any notes that remain outstanding following the tender offer. It is offering a redemption price of 103 plus accrued interest to the Dec. 3 redemption date.

In the tender offer, the company is offering a total consideration of $1,105.71 per $1,000 principal amount of 7 7/8% notes and $1,114.29 per $1,000 principal amount of 7½% notes, both including a consent payment of $30.00 for notes tendered by the consent deadline.

Calpine will also pay accrued interest up to, but not including, the settlement date.

The total consideration for the 7 7/8% notes was calculated using a weighted average that assumes that

• $770 million of the notes would be repurchased at a price equal to the sum of the present values on the applicable early settlement date of (a) $1,039.37 on July 31, 2015, the notes’ first redemption date, and (b) the interest that would accrue for the notes to the redemption date, minus the accrued interest from the most recent interest payment date to, but not including, the applicable early settlement date; and

• $110 million of the 7 7/8% notes would be repurchased at a price equal to the sum of the present values on the applicable early settlement date of (a) $1,030 on Dec. 3, 2014 and (b) the interest that would accrue from the most recent interest payment date to, but not including, the special redemption date, minus the accrued interest from the most recent interest payment date to, but not including, the applicable early settlement date.

The total consideration for the 7½% notes was calculated using a weighted average that assumes that

• $1.4 billion of the notes would be repurchased at a price equal to the sum of the present values on the applicable early settlement date of (a) $1,037.50 on Nov. 1, 2015, the notes’ first redemption date, and (b) the interest that would accrue for the notes to the redemption date, minus the accrued interest from the most recent interest payment date to, but not including, the applicable early settlement date; and

• $200 million of the 7½% notes would be repurchased at a price equal to the sum of the present values on the applicable early settlement date of (a) $1,030 on Dec. 3, 2014 and (b) the interest that would accrue from the most recent interest payment date to, but not including, the special redemption date, minus the accrued interest from the most recent interest payment date to, but not including, the applicable early settlement date.

The present values for both series were determined based on a yield of the reference U.S. Treasury rate to the redemption date plus 50 basis points.

Calpine previously said it was in discussions with holders of its $320 million of 8% senior secured notes due 2019 to repurchase some or all of those notes.

The company has the option to redeem some or all of the 8% notes at a make-whole price.

Morgan Stanley & Co. LLC is the dealer manager and solicitation agent (212 761-1057 or 800 624-1808). D.F. King & Co., Inc. is the tender agent and the information agent (800 628-8536 or call collect 212 269-5550).

Affiliates of Goldman Sachs & Co. hold all of the outstanding 8% notes.

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