Calpine amended plan boosts shareholder return to $2.05 per share

By Caroline Salls

Pittsburgh, Aug. 27 - Calpine Corp. filed an amended plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the Southern District of New York that increases the return for existing equity holders to $2.05 per share from $1.80 per share.

According to the disclosure statement, the existing interest holders' distribution will come in the form of shares of new common stock in the reorganized company, with the new shares valued at $982 million.

According to a company news release, Calpine is still on track to have the plan confirmed in the fourth quarter.

"Since filing our original plan, we have been in discussions with our stakeholders and believe that our amended plan provides greater value to Calpine's estate with less execution risk to our stakeholders than other alternatives presented," chief executive officer Robert P. May said in the release.

Calpine said the amended plan maintains the key terms of the original plan filed in June, aside from the greater recoveries for stakeholders.

Consistent with the original plan and assuming the amended plan is confirmed by Dec. 31, Calpine said the reorganized company will have an estimated midpoint reorganization value of $21.7 billion, and, at emergence, Calpine estimates that its total enterprise value will be between $19.2 billion and $21.3 billion, with a midpoint of $20.3 billion. The reorganized company is expected to have $1.4 billion in distributable cash.

Under the amended plan, allowed claims are expected to range from $20.1 billion to $22 billion after completion of the claims objection, reconciliation and resolution process.

Under this range, general unsecured creditors should recover 95% to 100% of their claims.

The plan calls for Calpine to be substantively consolidated with its debtors for purposes of plan distribution.

Plan creditor treatment

Treatment of creditors under the amended plan will include:

• Holders of $3.97 billion in debtor-in-possession facility claims, $5.87 million to $5.88 million in administrative claims, $69.88 million to $76.19 million in priority tax claims, zero to $124.8 million in first-lien debt claims, $3.96 billion to $4 billion in second-lien debt claims and $790,000 in other priority claims will be paid in full in cash;

• Holders of $131.32 million to $578.61 million in other secured claims will either be paid in full in cash, will have their claims reinstated or will receive the collateral securing the claim;

• Holders of $949.48 million to $956.81 million in senior notes claims, $2.65 billion to $2.79 billion in general note claims, $335.04 million in Canadian intercompany claims, $702.93 million to $1.45 billion in rejection damages claims, $761.75 million to $776.77 million in subordinated notes claims, $201.86 million to $430.56 million in general unsecured claims and up to $538.65 million in unsecured make-whole claims will receive shares of new common stock in the reorganized company;

• Holders of ULC1 settlement claims will receive a share of new common stock in the reorganized company, with distribution to be based on a formula, with the total settlement amount not to exceed $3.505 billion and the total distribution amount not to exceed the principal amount outstanding on the ULC1 notes, plus contract interest, plus $8 million in fees;

• Holders of intercompany claims will either have their claims reinstated or receive no distribution under the plan;

• Holders of intercompany interests will have their claims reinstated; and

• Holders of interests will receive their share of new common stock in the reorganized company.

As previously reported, Calpine has a commitment for $8 billion in exit financing from Goldman Sachs, Credit Suisse, Deutsche Bank and Morgan Stanley.

The commitment to fund the exit facility expires on Jan. 31.

According to the commitment letter, interest on the first-lien facilities will be based on the ratings of the loans.

If the loans receive a Moody's Investors Service corporate family rating of B1 or higher or a Standard & Poor's corporate credit rating of B+ or higher, interest will be Base rate plus 75 basis points or Eurodollar rate plus 175 bps; if Moody's rating is B2 or lower or S&P's rating is B or lower, the interest rate will be Base rate plus 100 bps or Eurodollar rate plus 200 bps.

Interest on the second-lien facility will be either Base rate plus 225 bps or Eurodollar rate plus 325 bps, provided that if Calpine elects to capitalize the interest, the payments will be increased by 75 bps for that payment period.

The second-lien facility will mature on Sept. 29, 2014. Maturity on the first-lien facilities is the earlier of the effective date of a plan of reorganization or the second anniversary of the DIP closing date, not changing from the original exit commitment.

A hearing on approval of the disclosure statement is scheduled for Sept. 11.

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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