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): December 22, 2005
CALPINE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation)
Commission File Number: 001-12079
I.R.S. Employer Identification Number: 77-0212977
50 West San Fernando Street
San Jose, California 95113
Telephone: (408) 995-5115
(Address of principal executive offices and telephone number)
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 AGREEMENT.
On December 22, 2005, Calpine Corporation, a Debtor-in-Possession (the
"Company"), and certain of its subsidiaries named therein (together with the
Company, the "Loan Parties"), entered into a Revolving Credit, Term Loan and
Guarantee Agreement (the "Credit Agreement"), dated as of December 22, 2005,
among the Company, as borrower, the other Loan Parties, as guarantors, the
lenders from time to time party thereto, Credit Suisse ("CS") and Deutsche Bank
Trust Company Americas ("DB"), as joint administrative agents, joint syndication
agents and joint documentation agents, and Deutsche Bank Securities Inc.
("DBSI") and CS, as joint lead arrangers and joint book runners. The Credit
Agreement facilities consist of a revolving loan, term loan and letter of credit
facility in an aggregate principal amount not to exceed $2 billion, which is
broken into a $1.35 billion first priority facility (comprising a $1 billion
revolving loan facility and a $350 million term loan facility) and a $650
million second priority term loan facility. DB acts as first priority agent and
CS acts as second priority agent. The proceeds of the loans and the letters of
credit are to be used for working capital and other general corporate purposes,
and to repay certain indebtedness associated with an existing leveraged lease
relating to certain geothermal assets known as The Geysers and to reacquire
title to The Geysers (referred to as the "Geysers Transaction"). The Company's
ability to utilize the Credit Agreement facilities is subject to an Interim
Order dated December 21, 2005, of the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") in connection with the
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") filed by the Company and the other Loan
Parties on December 20, 2005 (such voluntary petitions being jointly
administered under the caption "In re Calpine Corporation, et al.", Case No.
05-60200 (BRL)). The Interim Order provides that the Company may currently draw
up to $500 million of the revolving facility and is not permitted to draw any
portion of the term loan facilities. The Bankruptcy Court has scheduled a final
hearing for January 25, 2006, to determine whether to issue an order approving
the Credit Agreement. If the Credit Agreement is approved, upon entry of the
Bankruptcy Court's order, the Credit Agreement provides that the full $350
million first priority term loan commitment, the remaining $500 million
revolving commitment and $300 million of the $650 million second priority term
loan commitment would be available upon the satisfaction of certain conditions
as set forth in the Credit Agreement. The Credit Agreement further provides that
the remaining $350 million of the second priority term loan commitment is only
permitted to be borrowed substantially concurrently with the consummation of the
Geysers Transaction.
The maturity date of the facilities is December 20, 2007. The Company may
elect to have loans under the facilities bear interest at (i) a eurodollar rate
(as set forth in the Credit Agreement) or (ii) the greater of (x) the prime rate
established from time to time by DB, in respect of the revolving facility and
the first priority term facility, or by CS, in respect of the second priority
term facility, and (y) the federal funds rate plus 0.50%, plus, for either
eurodollar or base rate loans, the applicable margin. The applicable margin for
revolving loans and first priority term loans is 1.25% for base rate loans and
2.25% for eurodollar loans, and for second priority term loans is 3.50% for base
rate loans and 4.50% for eurodollar loans.
In connection with the execution of the Credit Agreement, the Company, the
other Loan Parties and DB, as collateral agent, also entered into a Security and
Pledge Agreement, dated as of December 22, 2005 (the "Security Agreement").
Under the Security Agreement, (i) pursuant to Section 364(c)(1) of the
Bankruptcy Code, the first priority facilities are secured by a first priority
lien on and security interest in, and the second priority facilities are secured
by a second priority lien on and security interest in, all present and
after-acquired property of the Company and the other Loan Parties not subject to
a valid, perfected and non-avoidable lien or security interest in existence on
the petition date or to a valid lien in existence on the petition date that is
perfected subsequent to the petition date as permitted by Bankruptcy Code
Section 546(b) and (ii) pursuant to Section 364(c)(3) of the Bankruptcy Code,
the facilities are secured by a perfected junior lien on, and security interest
in, all present and after-acquired property of the Company and the other Loan
Parties that is otherwise subject to a valid, perfected and non-avoidable lien
or security interest in existence on the petition date or a valid lien in
existence on the petition date that is perfected subsequent to the petition date
as permitted by Bankruptcy Code Section 546(b).
The Credit Agreement provides that the loans must be prepaid with the net
cash proceeds from the sale of certain assets in excess of $1 million, excluding
the sale of turbines in an amount up to $200 million and certain projects in an
amount up to $100 million. In addition, the Company may elect to reinvest $50
million of net cash proceeds during the term of the facilities rather than using
them to prepay the loans. The loans must also be prepaid with net cash proceeds
from certain insurance claims or condemnation proceedings, except that $25
million relating to The Geysers and $150 million relating to any other assets of
the Company and its subsidiaries may be reinvested in assets useful in the
Company's business. Upon the occurrence of an event of default, the lenders may
terminate their commitments, declare the loans then outstanding to be forthwith
due and payable, require the Company and the other Loan Parties to cash
collateralize any outstanding letters of credit in an amount equal to 105% of
the face value and exercise other remedies at law. Events of default include
failure to pay interest, principal and other amounts when due; material
misrepresentations; any material portion of the Credit Agreement ceasing to be
valid and binding on the Company and the other Loan Parties; defaults in the
observance and performance of covenants; defaults in the payment or performance
of certain post-petition date indebtedness or guarantee obligations; dismissal
of the Chapter 11 cases of the Company or another Loan Party or conversion
thereof to a case under Chapter 7 of the Bankruptcy Code; the entry of certain
orders in the Bankruptcy Court; making unauthorized pre-petition payments;
certain environmental matters; certain ERISA matters; cross-defaults to certain
other indebtedness of the Company and its subsidiaries and a change in control
of the Company.
The Company, the other Loan Parties and certain other subsidiaries of the
Company are obligated under the terms of the Credit Agreement to comply with
certain covenants, including restrictions on use of proceeds of loans under the
facilities; incurrence or maintenance of debt; incurrence or maintenance of
liens; creating or maintaining guarantee obligations; fundamental changes to
business; selling or leasing assets; issuance of capital stock and dividends;
limitations on investments, loans and advances; entering into certain affiliate
transactions; maintaining a required system of cash management; allowing certain
Chapter 11 claims; capital expenditures and other financial covenants. The
Company, the other Loan Parties and certain other subsidiaries of the Company
also affirmatively covenant to deliver certain financial statements and other
information to the lenders; pay certain obligations; maintain their existence,
property and insurance; comply with contractual and legal obligations and obtain
ratings for the facilities. The Company has provided indemnities to the lenders
with respect to certain claims, other than such claims arising out of the gross
negligence or willful misconduct of an indemnified party.
Each of CS, DB, DBSI or their affiliates have, from time to time,
performed, and may in the future perform, various financial advisory, lending
and investment banking services for the Company and its subsidiaries, for which
they received or will receive customary fees and expenses.
ITEM 2.03 -- CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
(a) The information set forth in Item 1.01 above is incorporated by
reference herein.
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.
-------------------------------------
Charles B. Clark, Jr.
Senior Vice President, Controller and
Chief Accounting Officer
Date: December 29, 2005