Calpine unit seeks consents to waive defaults under second-priority notes indenture, credit agreement

By Caroline Salls

Pittsburgh, Feb. 23 - Calpine Construction Finance Co. LP and CCFC Finance Corp. have begun a consent solicitation to seek a waiver of existing defaults stemming from Calpine Corp.'s bankruptcy filing from holders of Calpine Construction's $415 million second-priority senior secured floating-rate notes due 2011, according to a company news release.

CCFC is requesting a similar waiver from the lenders under the credit and guarantee agreement governing its $385 million first-priority senior secured institutional term loans due 2009.

According to the release, the defaults resulted from the failure of one of Calpine's controlled subsidiaries to make payments to CCFC under a gas sale and power purchase agreement.

If both waivers are obtained, CCFC would be permitted to make distributions to CCFC Preferred Holdings, LLC, its indirect parent, to enable it to pay the semi-annual dividend on its redeemable preferred shares.

A waiver agreement will be executed under the notes indenture following receipt of the consent of at least a majority of outstanding notes. Under the credit agreement, a similar waiver agreement will be executed following receipt of the consent of lenders holding more than 50% of the aggregate outstanding term loans.

The consent solicitations will expire at 5 p.m. ET on March 3.

Merrill Lynch & Co. is the solicitation agent for the consent solicitation. Global Bondholder Services Corp. (866 736-2200) will act as information agent. Wilmington Trust Co. (302 636-6181) will act as tabulation agent.

Goldman Sachs Credit Partners LP is the administrative agent under the credit agreement.

Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05- 60200.

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