Calpine granted final court approval of $2 billion DIP

By Caroline Salls

Pittsburgh, Jan. 25 - Calpine Corp. obtained final approval for its $2 billion debtor-in-possession credit facility from Deutsche Bank and Credit Suisse, according to a company news release.

Proceeds of the DIP will be used to fund operations during Calpine's Chapter 11 restructuring and to retire some obligations at The Geysers.

The financing includes a $1 billion revolving credit facility - which has a $300 million sub-limit for letters of credit and includes up to $10 million for swing loans and $500 million available on an interim basis - and $1 billion in term loans, including a $350 million first-priority term loan and a $650 million second-priority term loan.

The DIP's term is the earlier of Dec. 20, 2007, the effective date of a plan of reorganization and upon the acceleration of the loans.

Interest is Libor plus 225 basis points for revolving, swingline and first-priority term loans and Libor plus 450 bps for second-priority term loans.

Calpine will pay a $30 million arrangement and underwriting fee and a $300,000 administrative fee.

The commitment fee will be based on the percent of usage of the revolving facility. For usage of 67% or more, the commitment fee will be 50 bps; for usage between 33% and 66%, the fee will be 75 bps and for less than 33% usage, the fee will be 100 bps

The letter-of-credit fee will be 225 bps, plus a 25 bps fronting fee.

According to the release, the facility is expected to close within the next 30 days.

The DIP facility is secured by liens on all of Calpine's unencumbered assets and junior liens on all of its encumbered assets.

"This financing provides us with ample liquidity to continue to meet the needs of our customers and the markets we serve," chief executive officer Robert P. May said in the release.

"It also provides our natural gas suppliers and other vendors the assurance that they will continue to be paid on a current basis during our restructuring."

Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05- 60200.

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