Calpine Agrees to Sell Six Southeast Power Plants for $1.57 Billion

  Calpine Agrees to Sell Six Southeast Power Plants for $1.57 Billion

                     To Divest 3.5 GW of Non-core Assets

Transaction Highlights:

  *Unlocks shareholder value from non-core, underappreciated assets
  *Accelerates utilization of net operating losses to offset projected
    taxable gains
  *Divesting expected full year 2014 Adjusted EBITDA and Adjusted Free Cash
    Flow of approximately $100 million and $70 million, respectively
  *Capital redeployment expected to be accretive to Adjusted Free Cash Flow
    Per Share

Business Wire

HOUSTON -- April 18, 2014

Calpine Corporation (NYSE:CPN) today announced that it has agreed to sell six
power plants in its Southeast region to LS Power for $1.57 billion in cash,
subject to working capital and other adjustments. The portfolio of assets
comprises 3,498 MW of combined-cycle generation capacity in Oklahoma,
Louisiana, Alabama, Florida and South Carolina.

“Today’s announcement represents substantial progress toward the achievement
of one of our top strategic priorities – the monetization of our Southeast
portfolio,” said Calpine’s Chief Executive Officer Jack Fusco. “This
transaction enables us to capture that value for our shareholders today, to
accelerate the usage of our net operating losses and to deliver meaningful
Adjusted Free Cash Flow Per Share accretion.

“Consistent with our track record, we will continue to be opportunistic in our
deployment of the capital generated from this sale, whether paying down debt,
investing in acquisition or development opportunities or repurchasing our own
shares of common stock,” added Fusco. “Meanwhile, I want to thank the talented
professionals at these plants for their dedication to operational excellence
that has helped advance Calpine toward its vision of being the premier power
generation company in the United States.”

Calpine expects to utilize existing federal and state net operating losses to
almost entirely offset the projected taxable gains from the sale. In addition,
none of the assets included in the transaction are directly encumbered with
project debt. Therefore, the transaction is expected to result in net cash
proceeds of approximately $1.53 billion, which the company intends to allocate
in a balanced manner that maintains leverage neutrality and is accretive to
Adjusted Free Cash Flow Per Share.

The six assets included in the transaction represent an aggregate capacity of
3,498 MW of combined-cycle generation resources:

Plant Name                  Plant Capacity      Location
Oneta Energy Center          1,134 MW    Coweta, OK
Carville Energy Center^(1)   501 MW       St. Gabriel, LA
Decatur Energy Center        795 MW       Decatur, AL
Hog Bayou Energy Center      237 MW       Mobile, AL
Santa Rosa Energy Center     225 MW       Pace, FL
Columbia Energy Center^(1)   606 MW       Calhoun County, SC
Total                        3,498 MW

________________

^(1) Indicates combined-cycle cogeneration power plant.

The divestiture of these assets will better align Calpine’s asset base with
its strategic focus on competitive wholesale power markets, most notably those
in its core regions: the Western U.S. (particularly California), Texas and the
Eastern U.S. (particularly the Mid-Atlantic). Following the close of the sale,
Calpine will retain ownership of four natural gas-fired power plants located
in the Southeast totaling 1,738 MW in Arkansas, Alabama and Florida. The
Company will continue to pursue opportunities to monetize the value of these
assets through contract or sale, consistent with its strategic objectives.

Along with the power plants and related assets, the transaction also includes
the sale of customary parts and services. The transaction is expected to close
in the second quarter of 2014, pending receipt of necessary regulatory
approvals and third-party consents. LS Power and its affiliates have agreed
not to trade in the Company’s stock until the close of the transaction.

White and Case LLP served as Calpine’s outside legal counsel in this
transaction.

About Calpine

Calpine Corporation generates more electricity than any other independent
power producer in America, with a fleet of 94 power plants in operation or
under construction, representing more than 29,000 megawatts of generation
capacity. Serving customers in 20 states and Canada, we specialize in
developing, constructing, owning and operating natural gas-fired and renewable
geothermal power plants that use advanced technologies to generate power in a
low-carbon and environmentally responsible manner. Our clean, efficient,
modern and flexible fleet is uniquely positioned to benefit from the secular
trends affecting our industry, including the abundant and affordable supply of
clean natural gas, stricter environmental regulation, aging power generation
infrastructure and the increasing need for dispatchable power plants to
successfully integrate intermittent renewables into the grid. We focus on
competitive wholesale power markets and advocate for market-driven solutions
that result in nondiscriminatory forward price signals for investors. Please
visit www.calpine.com to learn more about why Calpine is a generation ahead –
today.

Non-GAAP Financial Measures

Calpine provides certain non-GAAP financial measures to investors because it
believes they are useful to investors and other users of its financial
statements in evaluating operating performance by providing them with an
additional tool to compare business performance across companies and across
periods. As used in this press release, the terms Adjusted EBITDA and Adjusted
Free Cash Flow with respect to certain full year 2014 results for the divested
assets are consistent with the definitions of such terms in Calpine’s earnings
releases which can be accessed via the SEC’s website at www.sec.gov and are as
follows:

Adjusted EBITDA represents net income (loss) attributable to Calpine before
net (income) loss attributable to the noncontrolling interest, interest,
taxes, depreciation and amortization, adjusted for certain non-cash and
non-recurring items. Adjusted EBITDA is not intended to represent cash flows
from operations or net income (loss) as defined by U.S. GAAP as an indicator
of operating performance and is not necessarily comparable to similarly titled
measures reported by other companies.

Adjusted Free Cash Flow represents net income before interest, taxes,
depreciation and amortization, as adjusted, less operating lease payments,
major maintenance expense and maintenance capital expenditures, net cash
interest, cash taxes and other adjustments, including non-recurring items.
Adjusted Free Cash Flow is a performance measure and is not intended to
represent net income (loss), the most directly comparable U.S. GAAP measure,
or liquidity and is not necessarily comparable to similarly titled measures
reported by other companies.

A reconciliation of such expected non-GAAP financial measures to the most
directly comparable GAAP measure for the divested assets is not included at
this time since it is not currently available without unreasonable effort due
to the fact that the Company has not traditionally maintained such information
on a separate basis for the divested assets; however, the Company intends to
provide updated guidance and related reconciliations for its 2014 operations
as a whole giving effect to the expected divestiture in its quarterly earnings
release for the first quarter of 2014.

Forward-Looking Information

In addition to historical information, this release contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Words such as
“believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will,” “should,”
“estimate,” “potential,” “project” and similar expressions identify
forward-looking statements. Such statements include, among others, those
concerning expected financial performance and strategic and operational plans,
as well as assumptions, expectations, predictions, intentions or beliefs about
future events. You are cautioned that any such forward-looking statements are
not guarantees of future performance and that a number of risks and
uncertainties could cause actual results to differ materially from those
anticipated in the forward-looking statements. Please see the risks identified
in this release or in Calpine’s reports and registration statements filed with
the Securities and Exchange Commission, including, without limitation, the
risk factors identified in its Annual Report on Form 10-K for the year ended
Dec. 31, 2013. These filings are available by visiting the Securities and
Exchange Commission’s website at www.sec.gov or Calpine’s website at
www.calpine.com. Given the risks and uncertainties surrounding forward-looking
statements, you should not place undue reliance on these statements. Many of
these factors are beyond our ability to control or predict. Our
forward-looking statements speak only as of the date of this release. Actual
results or developments may differ materially from the expectations expressed
or implied in the forward-looking statements, and, other than as required by
law, Calpine undertakes no obligation to update any such statements, whether
as a result of new information, future events, or otherwise.

Contact:

Calpine Corporation
Media Relations:
Brett Kerr, 713-830-8809
brett.kerr@calpine.com
or
Investor Relations:
Bryan Kimzey, 713-830-8775
bryan.kimzey@calpine.com
 
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