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Calpine plans $1.4 billion credit facility for Pepco assets purchase
By Sara Rosenberg
New York, April 21 - Calpine Corp. has received a commitment for a $1.4 billion credit facility to help fund its acquisition of power generation assets from Pepco Holdings Inc., company officials said in a conference call on Wednesday.
Credit Suisse, Citigroup and Deutsche Bank are the lead banks on the deal.
The facility consists of a $1.3 billion amortizing seven-year term loan and a $100 million revolver.
Officials said in the call that the new debt will reside at the subsidiary level, which means that it will not need to obtain an amendment from existing term loan holders to complete the transaction. It also allows the company to take advantage of the lower cost of capital of subsidiary-level financing without sacrificing flexibility.
Under the acquisition agreement, Calpine is buying the 4,490 MW of power generation assets from Pepco for $1.65 billion plus adjustments.
Other funding for the transaction will come from $535 million of corporate cash.
Pro forma net debt to adjusted EBITDA as of Dec. 31 is 4.8 times.
In addition, pro forma adjusted EBITDA for 2010 is estimated between $1.625 billion and $1.725 billion while for 2011, it is estimated between $1.685 billion and $1.885 billion.
And, pro forma adjusted free cash flow for 2010 is estimated between $465 million and $565 million. For 2011, it is estimated between $365 million and $565 million.
Closing on the acquisition is expected to take place by June 30, subject to customary conditions, approval from the Federal Energy Regulatory Commission and antitrust review under the Hart-Scott-Rodino Act. No shareholder approval is required.
Calpine is a Houston-based power generation company.
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