Daily News: October 11, 2012

Morgan Stanley, Others Close $835 Million Term Loan for Calpine

Calpine Corporation announced that it has closed on an $835 million first lien senior secured term loan. The term loan, which amortizes at a rate of 1% per year, bears interest at LIBOR plus 3.25% per annum (subject to a LIBOR floor of 1.25%) and matures in 2019. Morgan Stanley, Barclays, Deutsche Bank and Royal Bank of Canada acted as lead arrangers on the transaction.

Calpine intends to utilize the proceeds of the Term Loan, along with cash on hand, to:

Refinance the currently callable portion of each of its outstanding corporate level senior secured notes, including approximately $590 million of principal, as well as accrued interest, fees and call premiums, and retire its project-level BRSP term loan facility, which includes the repayment of approximately $218 million of principal as well as accrued interest and fees.

The company’s senior secured notes are scheduled to mature between 2017 and 2023 and bear interest at fixed rates of between 7.25% and 8.00%. Meanwhile, the BRSP term loan, which has now been fully retired, was scheduled to mature in 2014 and bore interest at LIBOR plus 4.50% per annum (subject to a LIBOR floor of 3.00%). The BRSP term loan was previously secured by the company’s Broad River and South Point Energy Centers.

“This refinancing is consistent with our stated goal of opportunistically accessing the capital markets,” said Todd Thornton, Calpine’s treasurer and vice president of Finance. “As a result of this transaction, we have exchanged higher-cost fixed rate debt for lower-cost floating rate debt, resulting in expected annual interest savings of approximately $25 million, which is accretive to Adjusted Recurring Free Cash Flow Per Share. In addition, we have further simplified our capital structure by removing a complicated project finance facility from our balance sheet. Going forward, we will continue to seek similar opportunities to reduce interest payments and streamline our debt.”

Calpine Corporation is an independent power producer in the U.S., with a fleet of 93 power generation plants representing more than 28,000 megawatts of generation capacity.

Previously on abfjournal.com:

Calpine Closes $360 Million Term Loan With Morgan Stanley, Monday, June 20, 2011