Calpine granted final court approval of global settlement with Calpine Canada Energy

By Jennifer Lanning Drey

Portland, Ore., July 27 - Calpine Corp. received final court approval of a global settlement between Calpine, its Canadian debtors and the informal committee of Calpine Energy Finance ULC senior noteholders, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the settlement reduces $12 billion in claims of ULCI bondholders to $3.5 billion, as well as resolves more than $250 million of intercompany claims asserted by Calpine in the Canadian insolvency proceeds and $1.1 billion of claims asserted in Calpine's bankruptcy case.

Additionally, the deal allows the Canadian units to sell $360 million in ULCI bonds and provides a $75 million payout to Calpine.

Also under the settlement, litigation of Calpine's objection to the Calpine Energy Finance ULC bondholders claim will be dismissed, as well as litigation filed against one of Calpine's non-debtor subsidiaries in connection with a transfer of ownership interests at the Greenfield Energy Centre being built in Ontario.

Additional settlement terms

• All intercompany claims between the U.S. and Canadian debtors will be resolved and the amounts fixed, eliminating more than $841 million of unsecured claims from the U.S. debtors' claims register;

• Greenfield's litigation against the U.S. debtor would be dismissed;

• The Calpine Energy Finance ULC bond objection would be withdrawn;

• Over $10.5 billion of third-party claims in both Canada's Company Creditors Arrangement Act proceedings and the U.S. cases will be resolved by the settlement;

• The Canadian and U.S. debtors have agreed on a procedure by which certain third-party claims filed in CCAA proceedings and related claimed filed in the U.S. courts will be resolved;

• About $15 million of the proceeds from the 2006 sale of Calpine's subsidiary Thomassen Turbine Systems BV will be split evenly among the U.S. and Canadian debtors. The proceeds have been held in escrow since the sale.

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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