Calpine tenders for 9 5/8% senior secured notes

By Jennifer Chiou

New York, June 9 - Calpine Corp. announced it has started a tender offer to purchase all its outstanding $785 million 9 5/8% first-priority senior secured notes due 2014.

The company is offering par plus accrued interest up to but excluding the purchase date. Expiry is midnight ET on July 8.

The San Jose, Calif.-based integrated power company said it has recently begun the process of selling its remaining U.S. gas assets.

While the time frame and terms of pending deals are yet to be determined, a sale would require the company to use the proceeds to tender for the notes under the terms of the indenture unless the money is put to another permitted use.

Proceeds remaining from the pending sale after the tender offer will be used to acquire new assets.

If Calpine does not acquire the new assets within 180 days of receiving the net proceeds, any remaining proceeds over $50 million must be used to offer to buy back some of its $3.68125 billion of second-lien secured debt.

Merrill Lynch & Co. is the dealer manager (888 654-8637 or call collect 212 449-4914). The Bank of New York is the tender agent and MacKenzie Partners, Inc. is the information agent (800 322-2885 or call collect 212 929-5500).

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