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Calpine, Parent of Retail Suppliers, Agrees To Be Acquired By Investor Consortium

August 17, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Calpine Corporation today announced that it has entered into a definitive agreement under which Energy Capital Partners (Energy Capital or ECP), along with a consortium of investors led by Access Industries and Canada Pension Plan Investment Board, will acquire Calpine for $15.25 per share in cash, or $5.6 billion.

The purchase price represents an approximately 51% premium to Calpine’s unaffected share price of $10.07 on May 9, 2017, the day prior to initial media speculation of a transaction. The transaction follows a competitive strategic review process and was unanimously approved by Calpine’s Board of Directors.

Along with Energy Capital Partners, the investor consortium is led by Access Industries and Canada Pension Plan Investment Board. An entity wholly owned and controlled by ECP and its consortium will fund 100% of the equity required to consummate the transaction. The transaction is not subject to a financing condition. Calpine expects both Standard and Poor’s and Moody’s Investors Service to affirm Calpine’s credit ratings.

"With ECP, Calpine will be able to operate as it always has – executing on our strategic objectives of providing safe and reliable power and serving our retail and wholesale customers with differentiated products and services. We will also continue to strengthen our wholesale power generation footprint, while benefiting from ECP’s support, industry expertise and long-term investment horizon," said Thad Hill, President and Chief Executive Officer of Calpine.

Tyler Reeder, a partner at Energy Capital Partners, stated that ECP does not intend to make any changes to Calpine's financial policy or previously announced $2.7 billion deleveraging plan.

Calpine will maintain its corporate headquarters in Houston, Texas with the current management team expected to remain in place.

The agreement includes a 45-day “go-shop” period, during which Calpine, with the assistance of its legal and financial advisors, can actively solicit, evaluate and potentially enter into negotiations with parties that offer superior alternative proposals. The agreement provides for the payment of a termination fee by Calpine of $142 million to the investor consortium in the event that the agreement is terminated for a superior proposal; except that the termination fee will be $65 million if Calpine terminates the agreement for a superior proposal from certain exempted persons prior to 12:01 a.m., Eastern time, on the 106th day after the date of the agreement. There can be no assurance that this process will result in a superior proposal. Calpine does not intend to disclose developments during this process unless and until its Board has made a decision with respect to any potential superior proposal.

The proposed transaction is subject to approval by stockholders representing a majority of outstanding shares of common stock of Calpine. In addition, the transaction is subject to expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. Other necessary regulatory filings include Federal Energy Regulatory Commission (FERC), New York Public Service Commission (NYPSC), the Public Utility Commission of Texas (PUCT) and other states, as necessary.

The parties currently expect the transaction to close in the first quarter of 2018.

Calpine owns retail suppliers Calpine Energy Solutions, Champion Energy, and North American Power

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