Calpine refinances debt in Q2, expects year-end cash of $1 billion

By Lisa Kerner

Charlotte, N.C., July 25 - Calpine Corp. completed two "opportunistic refinancings" during the second quarter, saving the company a "significant amount" of interest going forward, said chief financial officer Zamir Rauf.

"In May, we refinanced our billion dollar CCFC bonds, extending the maturity and, in the process, generating projected net run savings of $43 million per year," Rauf said during Calpine's earnings conference call on Thursday.

"Similarly, last month we amended our billion dollar corporate revolver, also extending the maturity and generating additional interest savings."

The $1 billion 8% notes, previously due in 2016, were replaced with a two-tranche term loan composed of $900 million priced at Libor plus 225 basis points due in 2020 and $300 million priced at Libor plus 250 bps due in 2022, each of which is subject to a Libor floor of 0.75%, according to the earnings news release.

Calpine extended the maturity of the revolver to 2018 from 2015 and reduced the Libor margin by 100 bps and the undrawn commitment fees by 25 bps.

According to Rauf, Calpine continues to look for similar opportunities across its debt structure to further increase adjusted free cash flow per share.

Also during the quarter, Calpine completed its $400 million share repurchase program. The company has bought back in total 55 million of its shares, or 11% of its stock, for $1 billion, or an average price of $18.18 per share.

"We expect to have a billion dollars of excess cash at the end of the year," said Rauf.

"And, as I've said before, we do not plan to hoard our cash. We continue to consider all the alternatives available to us and remain committed to putting our capital to work."

Share repurchase "remains a key part" of Calpine's capital allocation, according to the CFO.

The Houston-based power company reported net debt of $10.3 billion and cash and cash equivalents of $715 million at quarter-end, down from $1.3 billion at the end of 2012.

Liquidity at June 30 was $1.7 billion.

Calpine attributed the decline in cash to the deployment of capital, including the repurchase of $362 million of its common stock, the funding of $143 million in construction payments and other seasonal variations in working capital.

Financial highlights, adjusted guidance

Second-quarter adjusted EBITDA was $343 million, compared to $403 million in the prior-year period.

Adjusted free cash flow was $38 million, or $0.08 per diluted share, compared to $87 million, or $0.19 per diluted share, for the second quarter of 2012.

Year-to-date, the company reported adjusted EBITDA of $629 million and negative adjusted free cash flow of $5 million.

Net loss for the quarter was $70 million, and $195 million for the six-month period.

Calpine reaffirmed its adjusted free cash flow per share guidance of $1.50 for 2013.

Due to weaker market conditions during the first half of the year, Calpine lowered the top end of its adjusted EBITDA and adjusted free cash flow guidance, maintained the bottom end of adjusted EBITDA and increased the bottom end of adjusted free cash flow.

Calpine now projects adjusted EBITDA of $1.8 billion to $1.88 billion and adjusted free cash flow of $640 million to $715 million.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.