Calpine Corporation Announces Cash Tender Offers and Consent Solicitations for Its 7.875% Senior Secured Notes due 2020 and

  Calpine Corporation Announces Cash Tender Offers and Consent Solicitations
  for Its 7.875% Senior Secured Notes due 2020 and 7.50% Senior Secured Notes
  due 2021

Business Wire

HOUSTON -- July 8, 2014

Calpine Corporation (NYSE: CPN) announced today that it has commenced cash
tender offers to purchase any and all of its outstanding 7.875% Senior Secured
Notes due 2020 (CUSIP Nos.: U13055 AK1 and 131347 BS4) and 7.50% Senior
Secured Notes due 2021 (CUSIP Nos.: U13055 AM7 and 131347 BW5) (collectively,
the “Notes”) and solicitation of consents (the “Consents”) from holders of
each series of Notes to effect certain proposed amendments to the relevant
indenture governing such series of Notes (each, an “Indenture”). These
amendments would (i) eliminate substantially all of the restrictive covenants,
certain events of default and related provisions contained in the applicable
Indenture, (ii) release the liens on the collateral securing the applicable
Notes and (iii) amend the satisfaction and discharge provisions of such
Indenture (the “Offers and Consent Solicitations”).

The terms and conditions of the Offers and Consent Solicitations are described
in an Offer to Purchase and Consent Solicitation Statement, dated July 8, 2014
(the “Offer to Purchase”), and a related Consent and Letter of Transmittal
(the “Letter of Transmittal”).

The Total Consideration for the 2020 Notes has been calculated using a
weighted average that assumes that (i) $770.0 million of the 2020 Notes would
be repurchased at a price equal to the sum of the present values on the
applicable Early Settlement Date (as such term is defined in the Offer to
Purchase) of (a) $1,039.37 (the amount payable with respect to each $1,000
principal amount of 2020 Notes (the “2020 Redemption Price”) on July 31, 2015,
the first redemption date under the “call schedule” of the applicable
Indenture) (the “2020 Redemption Date”) and (b) the interest that would accrue
with respect to each $1,000 principal amount of 2020 Notes from the most
recent interest payment date for the 2020 Notes to, but not including, the
2020 Redemption Date, minus the accrued interest with respect to each $1,000
principal amount of 2020 Notes from the most recent interest payment date for
the 2020 Notes to, but not including, the applicable Early Settlement Date;
and (ii) $110.0 million of the 2020 Notes (10% of the original aggregate
principal amount) would be repurchased at a price equal to the sum of the
present values on the applicable Early Settlement Date of (a) $1,030.00 (the
amount payable with respect to each $1,000 principal amount of 2020 Notes (the
“2020 Special Redemption Price”) on December 3, 2014) (the “2020 Special
Redemption Date”) and (b) the interest that would accrue with respect to each
$1,000 principal amount of 2020 Notes from the most recent interest payment
date for the 2020 Notes pursuant to the “10%” redemption provision of the
applicable Indenture to, but not including, the 2020 Special Redemption Date,
minus the accrued interest with respect to each $1,000 principal amount of
2020 Notes from the most recent interest payment date for the 2020 Notes to,
but not including, the applicable Early Settlement Date. The present values
for the 2020 Notes were determined based on a yield to the 2020 Special
Redemption Date or the 2020 Redemption Date, as applicable, equal to the
reference U.S. Treasury rate to such redemption date plus 50 basis points. The
Total Consideration for the 2021 Notes has been calculated using a weighted
average that assumes that (i) $1,400.0 million of the 2021 Notes would be
repurchased at a price equal to the sum of the present values on the
applicable Early Settlement Date of (a) $1,037.50 (the amount payable with
respect to each $1,000 principal amount of 2021 Notes (the “2021 Redemption
Price”) on November 1, 2015, the first redemption date under the “call
schedule” of the applicable Indenture) (the “2021 Redemption Date”) and (b)
the interest that would accrue with respect to each $1,000 principal amount of
2021 Notes from the most recent interest payment date for the 2021 Notes to,
but not including, the 2021 Redemption Date, minus the accrued interest with
respect to each $1,000 principal amount of 2021 Notes from the most recent
interest payment date for the 2021 Notes to, but not including, the applicable
Early Settlement Date; and (ii) $200.0 million of the 2021 Notes (10% of the
original aggregate principal amount) would be repurchased at a price equal to
the sum of the present values on the applicable Early Settlement Date of (a)
$1,030.00 (the amount payable with respect to each $1,000 principal amount of
2021 Notes (the “2021 Special Redemption Price”) on December 3, 2014) (the
“2021 Special Redemption Date”) and (b) the interest that would accrue with
respect to each $1,000 principal amount of 2021 Notes from the most recent
interest payment date for the 2021 Notes pursuant to the “10%” redemption
provision of the applicable Indenture to, but not including, the 2021 Special
Redemption Date, minus the accrued interest with respect to each $1,000
principal amount of 2021 Notes from the most recent interest payment date for
the 2021 Notes to, but not including, the applicable Early Settlement Date.
The present values for the 2021 Notes were determined based on a yield to the
2021 Special Redemption Date or the 2021 Redemption Date, as applicable, equal
to the reference U.S. Treasury rate to such redemption date plus 50 basis
points.

The following table summarizes the pricing terms of the Offers and Consent
Solicitations:

                                          Dollars per $1,000 Principal Amount of Notes
                               Aggregate
                 CUSIP                             Tender Offer     Consent    Total
                               Principal
                               Amount
Title of         Numbers       Outstanding         Consideration       Payment       Consideration
Securities
7.875%           U13055
Senior           AK1 and       $ 880,000,000
Secured                                            $ 1,075.71          $ 30.00       $ 1,105.71
                 131347        
Notes due        BS4
2020
                                                                                                   
7.50%
Senior           U13055
Secured          AM7 and       $                   $ 1,084.29          $ 30.00       $ 1,114.29
                 131347        1,600,000,000
Notes due        BW5
2021
                                                                                                   

The Offers and Consent Solicitations will each expire at 12:00 midnight, New
York City Time, on August 4, 2014, unless extended or earlier terminated (the
“Expiration Date”). The consideration for each $1,000 principal amount of
Notes validly tendered and not withdrawn at or prior to 5:00 p.m. New York
City Time on July 21, 2014, unless extended (the “Consent Date”), and accepted
for purchase pursuant to the Offers and Consent Solicitations will be the
applicable Total Consideration set forth in the table above. The consideration
for each $1,000 principal amount of Notes validly tendered after the
applicable Consent Date and at or prior to the applicable Expiration Date and
accepted for purchase pursuant to the Offers and Consent Solicitations will be
the applicable Tender Offer Consideration set forth in the table above, which
consists of the applicable Total Consideration less the related Consent
Payment set forth in the table above. Holders of Notes tendering Notes after
the applicable Consent Date will not be eligible to receive the related
Consent Payment.

Holders of Notes validly tendered and accepted for purchase pursuant to the
Offers and Consent Solicitations will receive the applicable consideration
described above, plus accrued and unpaid interest from the last interest
payment date applicable to such Notes to, but not including, the applicable
Settlement Date (as such term is defined in the Offer to Purchase).

Tendered Notes and deliveries of Consents may be withdrawn or revoked at any
time prior to the applicable Supplemental Indenture (as such term is defined
in the Offer to Purchase) becoming effective (with respect to each series of
Notes, the “Withdrawal Date”), which may occur before the applicable Consent
Date. Holders of Notes who tender their Notes and deliver Consents after the
applicable Withdrawal Date, but at or prior to the applicable Expiration Date,
may not withdraw their tendered applicable Notes and delivered related
Consents. Holders of Notes who validly tender their Notes will be deemed to
have validly delivered the related Consents. Holders of Notes may not tender
Notes without delivering the related Consents. The consummation of the Offers
and Consent Solicitations is not conditioned upon any minimum amount of Notes
being tendered, but is subject to, and conditioned upon, the satisfaction or
waiver of certain conditions described in the Offer to Purchase, including,
among others, Calpine Corporation receiving net proceeds from financing
transactions on terms and conditions acceptable to it, in its sole discretion.
Calpine intends to launch offerings of senior unsecured notes due 2023 and
2025, a portion of the net proceeds of which, together with cash on hand (if
necessary), will be used to fund the aggregate consideration and accrued
interest for all Notes tendered pursuant to the Offers and accepted for
purchase by Calpine Corporation, and to pay all fees and expenses incurred in
connection with the Offers and Consent Solicitations. On the applicable Early
Settlement Date, if any, Calpine Corporation will pay the consideration due
with respect to related Notes accepted for payment on such date and will mail
(1) a 30-day notice of redemption to the Holders of such Notes that remain
outstanding, minus 10% of the original aggregate principal amount of such
Notes (which equals $110,000,000 of 2020 Notes and $200,000,000 of 2021
Notes), at a “make-whole” redemption price and (2) a notice of redemption to
redeem 10% of the original aggregate principal amount of such Notes (which
equals $110,000,000 of 2020 Notes and $200,000,000 of 2021 Notes) at a
redemption price of 103% thereof on December 3, 2014. Calpine Corporation will
use any funds remaining from the sources described above after the applicable
Early Settlement Date (i) to pay on the applicable Final Settlement Date (as
such term is defined in the Offer to Purchase) the consideration due with
respect to Notes tendered after the applicable Consent Date and at or prior to
the applicable Expiration Date and accepted for payment and (ii) to pay the
consideration due with respect to Notes redeemed pursuant to the redemptions
described above.

Morgan Stanley & Co. LLC has been retained as the dealer manager and
solicitation agent. D.F. King & Co., Inc. has been retained to serve as both
the tender agent and the information agent. Persons with questions regarding
the Offers and Consent Solicitations should contact Morgan Stanley & Co. LLC
at (toll-free) (212) 761-1057 or (collect) (800) 624-1808. Requests for copies
of the Offer to Purchase, the Letter of Transmittal and other related
materials should be directed to D.F. King & Co., Inc. at (toll-free) (800)
628-8536 or (collect) (212) 269-5550.

None of Calpine Corporation or its affiliates, its board of directors, the
dealer manager and solicitation agent, the tender agent and the information
agent or the trustee for the Notes, makes any recommendation as to whether
holders of the Notes should tender or refrain from tendering the Notes.

This press release shall not constitute an offer to sell or the solicitation
of an offer to buy the Notes or any other securities, nor shall there be any
sale of the Notes or any other securities in any state in which such offer,
solicitation or sale would be unlawful. The Offers and Consent Solicitations
are made only through the use of the Offer to Purchase and the accompanying
Letter of Transmittal. The Offers and Consent Solicitations are not being made
to holders of Notes in any jurisdiction in which the making or acceptance
thereof would not be in compliance with the securities, blue sky or other laws
of such jurisdiction. In any jurisdiction in which the Offers and Consent
Solicitations are required to be made by a licensed broker or dealer, the
Offers and Consent Solicitations will be deemed to be made on behalf of
Calpine Corporation by the dealer manager or one or more registered brokers or
dealers that are licensed under the laws of such jurisdiction.

About Calpine

Calpine Corporation is America’s largest generator of electricity from natural
gas and geothermal resources. Our fleet of 87 power plants in operation or
under construction represents approximately 26,000 megawatts of generation
capacity. Serving customers in 17 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.

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
December 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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