Calpine to Acquire Noble Americas Energy Solutions, Significantly Enhancing Retail Energy Platform
October 09 2016 - 7:10PM
Business Wire
Strategic and Financial Highlights:
- Best-in-class commercial and industrial
retail electricity provider in the U.S.
- Complements Calpine’s existing
wholesale power generation footprint
- Approx. $700 million net cash deployed
represents approx. 5x Adjusted EBITDA
- Highly free cash flow and credit
accretive transaction
Calpine Corporation (NYSE:CPN) announced today that it has
entered into an agreement to purchase Noble Americas Energy
Solutions, LLC (NAES), the nation’s largest independent supplier of
power to commercial and industrial retail customers, for a purchase
price of $800 million plus an estimated $100 million of net working
capital at closing. Calpine expects to recover approximately $200
million through collateral synergies and the runoff of acquired
legacy hedges, substantially within the first year, resulting in
expected net cash deployed of approximately $700 million (including
working capital), or approximately five times NAES’ recent and
expected run-rate Adjusted EBITDA.
“We are excited to be acquiring the best commercial and
industrial direct energy sales platform in the U.S. The acquisition
of this well-regarded organization known for providing
sophisticated customers with highly customized products is a
natural fit with Calpine’s customer-centric culture and will allow
us to build upon the success we have experienced since our entry
into retail last year through the Champion Energy platform,” said
Thad Hill, Calpine’s President and Chief Executive Officer. “In
addition to expanding our retail customer sales channels and
product offerings, we will more than double the volume of retail
load we are capable of serving across the country from our
complementary wholesale power generation fleet.
“Financially, this transaction is highly cash flow and credit
accretive, given a rapidly amortizing bridge loan, the achievement
of collateral synergies and the ongoing generation of stable and
substantial cash flows,” concluded Hill. “In addition to delivering
strong annual cash flow, the strong sales effort by the NAES team
has continued to build the mark-to-market value of their book over
the last several years, which will help ensure future success of
the business. We look forward to welcoming the entire NAES team to
the Calpine family.”
NAES
NAES currently serves commercial and industrial customers in 18
states nationwide, including California, Texas, the Mid-Atlantic
and Northeastern United States, where Calpine’s wholesale power
generation fleet is primarily concentrated. The organization will
remain headquartered in San Diego and will continue to operate
under the leadership of Jim Wood, President of NAES.
“We are thrilled to be joining the Calpine team,” said Wood.
“Our customers should know that we will continue to provide the
same high level of services and product offerings during the
ownership transition and, when under the Calpine banner, we expect
to provide even greater value-added products and services.”
Funding and Credit Support
Calpine expects to fund the acquisition with a combination of
cash on hand and temporary bridge loan financing of up to $550
million. The company intends to repay the bridge facility during
2017 with proceeds from announced asset sales as well as cash from
operations, including that generated from the anticipated
collateral synergies.
Under Calpine ownership, anticipated collateral needs are
expected to be met with approximately $240 million in letters of
credit and $20 million of surety bonds, leaving almost $1.2 billion
of Calpine Corporate Revolver capacity remaining at closing.
Approvals and Time to Close
Calpine will acquire the business from Noble Americas Gas &
Power Corp., a subsidiary of Noble Group Ltd. The transaction is
expected to close by year end 2016, subject to customary closing
conditions, approval by shareholders of Noble Group Ltd., approval
from the Federal Energy Regulatory Commission and antitrust review
under the Hart-Scott-Rodino Act.
About Calpine
Calpine Corporation is America’s largest generator of
electricity from natural gas and geothermal resources. Our fleet of
84 power plants in operation or under construction represents more
than 27,000 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.
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, 2015 and its Quarterly Report on Form 10-Q
for the three months ended June 30, 2016. 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20161009005064/en/
Calpine CorporationMedia Relations:Brett Kerr,
713-830-8809brett.kerr@calpine.comorInvestor
Relations:Bryan Kimzey,
713-830-8775bryan.kimzey@calpine.com
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