Calpine subsidiary launches $1.3 billion term loan at range of Libor plus 350-375 bps

By Sara Rosenberg

New York, May 17 - Calpine New Development Holdings, a subsidiary of Calpine Corp., launched its $1.3 billion amortizing seven-year term loan on Monday with price talk of Libor plus 350 basis points if ratings are four-Bs and Libor plus 375 bps if ratings are three-Bs, according to sources.

The term loan carries a 1.5% Libor floor and is being offered at an original issue discount of 98, sources said.

Credit Suisse, Citigroup and Deutsche Bank are the lead banks on the $1.4 billion credit facility, which also includes a $100 million revolver.

Proceeds will be used to help fund the acquisition of 4,490 MW of power generation assets from Pepco Holdings Inc. 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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