UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2005
CALPINE CORPORATION
(A Delaware Corporation)
Commission file number: 001-12079
I.R.S. Employer Identification No. 77-0212977
50 West San Fernando Street
San Jose, California 95113
Telephone: (408) 995-5115
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 -- ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Effective as of February 25, 2005, Calpine Steamboat Holdings, LLC
("Steamboat"), an indirect subsidiary of Calpine Corporation ("Calpine"),
entered into a $503 million non-recourse project finance facility with Calyon
New York Branch, as lead arranger, underwriter, co-book runner, administrative
agent and collateral agent; Cobank, ACB, as a lead arranger, underwriter,
co-syndication agent and co-book runner; HSH Nordbank AG, as a lead arranger,
underwriter and co-documentation agent; UFJ Bank Limited, as a lead arranger,
underwriter and co-documentation agent; and Bayerische Hypo-Und Vereinsbank AG,
New York Branch, as a lead arranger, underwriter and co-syndication agent, and
the Lenders from time to time party thereto. The facility will provide up to
$215 million in funding to complete the construction of the 375-megawatt Mankato
Energy Center in Blue Earth County, Minnesota, and $251.5 million in funding to
complete the 250-megawatt Freeport Energy Center, in Freeport, Texas. The
facility is initially structured as a construction loan, converting to a term
loan upon commercial operations of both plants, and will mature in December
2011. Steamboat may elect to have loans under the facility bear interest at (i)
LIBOR plus the applicable margin or (ii) the greater of the prime rate
established from time to time by Calyon or the federal funds rate plus 0.50%,
plus, in either case, the applicable margin minus 0.75%. The applicable margin
for construction loans is 1.75% and for term loans is 1.75% during years one and
two, 1.875% during years three and four, and 2.00% thereafter. The facility is
secured by substantially all of the assets of the plants and Steamboat,
Steamboat's equity in the companies that directly hold the plants and, during
the construction period, two Siemens 501F combustion turbines. Steamboat is
required to enter into interest rate hedging arrangements for at least half of
the loan amount.
The loans must be prepaid with any amounts which have been held in
Steamboat's distribution suspense account for eight quarters; certain liquidated
damages received from the construction contractor; certain insurance proceeds
that have not been used to repair the plants; certain cost savings associated
with the Freeport plant; and certain proceeds received from the offtaker of the
Freeport plant upon the sale of the Freeport plant to such offtaker pursuant to
an option described in the capacity sales agreement with the off taker. Upon the
occurrence of an event of default, Steamboat is required to use certain project
funds to prepay the loans at the direction of the majority lenders. In addition,
the facility could be accelerated upon the occurrence of an event of default.
Events of default include failure to pay interest, principal and other amounts
when due; other breaches under the facility (subject to applicable cure periods)
including material misrepresentations or omissions with respect to
representations; loss of or damage to a substantial portion of the collateral
securing the facility; abandonment of the plants; failure to maintain applicable
regulatory status and permits; certain changes in control of Steamboat or the
plants; cross defaults to material project documents, other credit and security
documents and other indebtedness in excess of $1 million; unenforceability or
termination in material part of the credit documents, material project documents
or any security; and certain insolvency events.
Steamboat is obligated under the terms of the facility to comply with
certain covenants, including restrictions on its use of proceeds of loans under
the facility; incurrence of liens; incurrence of debt; making investments;
paying dividends or distributions; selling or leasing assets; entering into
certain affiliate transactions; changing the nature of its business; and
amending material project documents. Steamboat also affirmatively covenants to
complete the construction of and to operate and maintain the plants; to maintain
certain debt service and debt to equity ratios and provide certain financial
information, operating budgets and notices of certain events to the lenders
under the facility. Steamboat has provided indemnities to the lenders and agents
with respect to certain claims, other than such claims arising out of the gross
negligence or willful misconduct of an indemnified party. The assets and
liabilities of Steamboat will be kept wholly separate from those of all other
entities, including Calpine and its other affiliates and Steamboat will pay its
operating expenses and liabilities from its own funds.
ITEM 2.03 -- CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information set forth under Item 1.01 of this Form 8-K is incorporated
herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1 Press Release dated March 3, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALPINE CORPORATION
By: /s/ Charles B. Clark, Jr.
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Charles B. Clark, Jr.
Senior Vice President and Controller
Chief Accounting Officer
Date: March 10, 2005
EXHIBIT INDEX
Exhibit Description
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99.1 Press release
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EXHIBIT 99.1
NEWS RELEASE CONTACTS: 408-995-5115
Media Relations: Katherine Potter, Ext. 1168
Investor Relations: Karen Bunton, Ext. 1121
Calpine Obtains $503 Million Project Finance Facility for
Its Mankato and Freeport Energy Centers
(SAN JOSE, CALIF.) - PR Newswire-First Call/March 3, 2005 - Calpine
Corporation's [NYSE: CPN] indirect subsidiary Calpine Steamboat Holdings, LLC
(Steamboat) has closed on a $503 million, non-recourse project finance facility
that will provide funding to complete the construction of the 375-megawatt
Mankato Energy Center (Mankato) in Blue Earth County, Minn., and the
250-megawatt Freeport Energy Center (Freeport), in Freeport, Texas. The project
finance facility will initially be structured as a construction loan, converting
to a term loan upon commercial operations of the plants, and will mature in
December 2011. The facility will initially be priced at LIBOR plus 1.75%, or
currently 4.5%. Steamboat is required to enter into interest rate hedging
arrangements for at least half of the loan amount in the next several weeks.
A group of five banks underwrote the project finance facility. Calyon
served as lead arranger, underwriter, co-book runner, and administrative agent;
CoBank as lead arranger, underwriter, co-book runner, and co-syndication agent;
HVB Group as lead arranger, underwriter, and co-syndication agent; HSH Nordbank
as lead arranger, underwriter, and co-documentation agent; and UFJ Bank Limited,
as lead arranger, underwriter, and co-documentation agent.
"This marks the first time that Calpine's strategy of managing every aspect
of a power plant, from development and construction to operations and
maintenance, has been financed in the broader commercial bank market," said
Calpine Vice President, Finance, Brian Harenza. "We are pleased the bank market
supports this next step in our evolution to a vertically integrated energy
company. We appreciate the continued support of these core institutions in
completing this financing, and we look forward to working with them on future
transactions."
Upon closing, Calpine received approximately $97 million for construction
costs spent to date on the two projects. The remaining amount available under
the project finance facility will be used to fund the completion of the
projects. As part of the closing, Calpine funded a $25 million letter of credit
for each project as credit support for construction activities.
Calpine will sell the entire amount of the output of the Mankato project to
Northern States Power under a 20-year power sales agreement. Mankato is expected
to begin commercial operations in June 2006. Calpine's wholly owned subsidiary
Calpine Construction Management Company, Inc. (CCMCI) is using its Calpine
Construct Plus approach to build the plant. CCMCI serves as general contractor
and manages all aspects of the project including design, engineering, and
equipment procurement through completion. This construction approach allows for
maximum flexibility to schedule and manage work to enhance safety and quality,
as well as improve plant efficiency and reliability. In addition, Calpine
Operating Services Company, Inc. (COSCI), a subsidiary of Calpine, will operate
and maintain the facility.
From its Freeport project, Calpine will sell steam and approximately 200
megawatts of power to The Dow Chemical Company under a 25-year power and steam
sales agreement. Freeport will sell the remaining 50 megawatts of power to
Calpine Energy Services, L.P., an affiliate of Calpine, under an index-based
power purchase agreement. Freeport is expected to enter commercial operations in
multiple stages, with the first phases expected to occur in the fall of 2005 and
the last phase in November 2006. CCMCI is also building Freeport using its
Calpine Construct Plus approach, and COSCI has contracted with Freeport to
perform all major maintenance at the facility.
A major power company, Calpine Corporation supplies customers and
communities with electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates integrated systems of
plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its
customized products and services include wholesale and retail electricity,
natural gas, gas turbine components and services, energy management, and a wide
range of power plant engineering, construction and operations services. Calpine
was founded in 1984. It is included in the S&P 500 Index and is publicly traded
on the New York Stock Exchange under the symbol CPN. For more information, visit
www.calpine.com.
This news release discusses certain matters that may be considered
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including statements regarding the intent, belief or current
expectations of Calpine Corporation ("the Company") and its management.
Prospective investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve a number of risks and
uncertainties that could materially affect actual results such as, but not
limited to, (i) the timing and extent of deregulation of energy markets and the
rules and regulations adopted on a transitional basis with respect thereto; (ii)
the timing and extent of changes in commodity prices for energy, particularly
natural gas and electricity; (iii) commercial operations of new plants that may
be delayed or prevented because of various development and construction risks,
such as a failure to obtain the necessary permits to operate, failure of
third-party contractors to perform their contractual obligations or failure to
obtain financing on acceptable terms; (iv) unscheduled outages of operating
plants; (v) a competitor's development of lower cost generating gas-fired power
plants; (vi) risks associated with marketing and selling power from power plants
in the newly-competitive energy market; (vii) other risks identified from
time-to-time in the Company's reports and registration statements filed with the
SEC, including the risk factors identified in its Annual Report on Form 10-K/A,
amendment number 2, for the year ended December 31, 2003 and in its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004, which can also be
found on the Company's website at www.calpine.com. All information set forth in
this news release is as of today's date, and the Company undertakes no duty to
update this information.