Calpine Greenfield Energy Centre interim ownership dispute resolution approved

By Caroline Salls

Pittsburgh, April 13 - Calpine Corp. obtained court approval of an interim resolution of disputes related to the ownership of the Greenfield Energy Centre, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, closing on financing for the Greenfield project has been delayed because a Canadian debtor has refused to transfer its ownership interest to another wholly owned, non-debtor Calpine entity or pledge its ownership interest to the project lenders, as is required under the project financing documents.

The Canadian debtors have also filed a fraudulent conveyance action in the Canadian Court, alleging that Calpine's limited partnership interest had been transferred for insufficient consideration before its bankruptcy filing, and the Canadian debtors seek to avoid that transfer and restrict any further transfer to a wholly owned, non-debtor Calpine subsidiary.

Calpine said the U.S. debtors and the Canadian debtors and their stakeholders continue to negotiate toward a global resolution of all cross-border issues, including issues related to the Greenfield project.

Until those issues are resolved, Calpine must continue to fund the project.

In addition, because Calpine cannot be certain that the proposed project lenders will continue to extend their financing commitments indefinitely while the parties continue negotiating, the U.S. debtors sought approval to enter the interim ownership resolution.

Under the interim resolution, the U.S. debtors agreed that if the Canadian debtors obtain a favorable judgment in the avoidance action, the Canadian debtors' will receive an administrative expense claim against the Calpine Chapter 11 estate.

Also, the Canadian debtors will transfer Calpine Energy Services Canada Ltd.'s general partner interest to another wholly owned non-debtor entity of the U.S. debtors' choice for $100,000.

On Thursday, Calpine also obtained court approval to make an additional $30 million capital contribution to its Greenfield Energy project on April 16 to avoid the delay of the commercial operation date or the dilution of the company's equity interests in the project.

Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20, 2005. Its Chapter 11 case number is 05-60200.

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