Calpine Corporation (NYSE:CPN), America’s largest generator of
electricity from natural gas and geothermal resources, 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.
“We are very pleased to announce this proposed transaction and
are confident it is in the best interests of our shareholders and
stakeholders,” said Frank Cassidy, Chairman of Calpine’s Board of
Directors. “This transaction is the result of an exhaustive review
of strategic alternatives undertaken by our Board, with the
assistance of outside advisors, to maximize shareholder value and
unlock the company’s intrinsic value, while eliminating execution
risk. We are confident that this is the best outcome of that review
and look forward to shareholder approval.”
“We are excited to partner with Energy Capital, a leading
private equity investment firm focused on North American energy
infrastructure and power assets,” said Thad Hill, President and
Chief Executive Officer of Calpine. “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. In short, Calpine will continue
to be the nation’s premier competitive power company.”
Tyler Reeder, a partner at Energy Capital Partners, stated: “We
look forward to joining forces with Calpine’s talented team as they
continue executing their strategy. We see significant value in
Calpine’s operational excellence and strong and stable cash flows
and have been impressed by the Company’s exceptional leadership and
talented employees. We do not expect to make any changes to the way
Calpine operates its business and intend to remain focused on
providing the high level of service to which Calpine’s wholesale
and retail customers have become accustomed. Finally, we do not
intend to make any changes to the Company’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.
“Go-Shop” Period
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.
Stockholder and Regulatory Approval
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.
Investor Consortium Funding
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.
Financial and Legal Advisors
Lazard is serving as financial advisor and White & Case LLP
as legal advisor to Calpine. Barclays Capital Inc. is serving as
financial advisor and Latham & Watkins LLP as legal advisor to
Energy Capital Partners.
About Calpine
Calpine Corporation is America’s largest generator of
electricity from natural gas and geothermal resources with
operations in competitive power markets. Our fleet of 80 power
plants in operation or under construction represents approximately
26,000 megawatts of generation capacity. Through wholesale power
operations and our retail businesses Calpine Energy Solutions and
Champion Energy, we serve customers in 25 states, Canada and
Mexico. Our clean, efficient, modern and flexible fleet uses
advanced technologies to generate power in a low-carbon and
environmentally responsible manner. We are uniquely positioned to
benefit from the secular trends affecting our industry, including
the abundant and affordable supply of clean natural gas,
environmental regulation, aging power generation infrastructure and
the increasing need for dispatchable power plants to successfully
integrate intermittent renewables into the grid. Please visit
www.calpine.com to learn more about how Calpine is creating power
for a sustainable future.
Calpine’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2017, has been filed with the Securities and Exchange
Commission (SEC) and is available on the SEC’s website at
www.sec.gov.
About Energy Capital Partners
Energy Capital Partners is a private equity and credit
investment firm with over $13 billion in capital commitments. The
firm focuses on investing in the traditional and renewable power
generation, midstream oil and gas, electric transmission,
environmental infrastructure and related energy services sectors of
North America’s energy infrastructure. For more information, visit
www.ecpartners.com.
About Access Industries
Access Industries is a privately held, U.S.-based industrial
group with global strategic investments. Founded in 1986 by Len
Blavatnik, an American entrepreneur and philanthropist, the group
is headquartered in New York, with offices in London and Moscow.
Access invests in industries where it can maximize long-term value
by developing regional and global leaders. Its industrial focus
spans four key sectors: natural resources and chemicals; media and
telecommunications; real estate and hospitality; and venture
capital. For more information, visit www.accessindustries.com.
About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a professional
investment management organization that invests the funds not
needed by the Canada Pension Plan (CPP) to pay current benefits on
behalf of 20 million contributors and beneficiaries. In order to
build a diversified portfolio of CPP assets, CPPIB invests in
public equities, private equities, real estate, infrastructure and
fixed income instruments. Headquartered in Toronto, with offices in
Hong Kong, London, Luxembourg, Mumbai, New York City, São Paulo and
Sydney, CPPIB is governed and managed independently of the Canada
Pension Plan and at arm's length from governments. At June 30,
2017, the CPP Fund totaled C$326.5 billion. For more information
about CPPIB, please visit www.cppib.com or follow us on LinkedIn or
Twitter.
Forward Looking Statements
This communication contains certain information, including
financial estimates and statements as to the expected timing,
completion and effects of the proposed merger involving Calpine and
ECP, which may constitute forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties, and actual results may differ
materially. Such forward looking statements include, among others,
statements about the benefits of the proposed transaction,
including future financial and operating results, plans,
objectives, expectations for Calpine and other statements that are
not historical facts. Such statements are based on the current
beliefs and expectations of the management of Calpine and are
subject to significant risks and uncertainties outside of Calpine’s
control. These risks and uncertainties include the possibility that
the anticipated benefits from the proposed transaction with ECP
will not be realized, or will not be realized within the expected
time periods; the occurrence of any event, change or other
circumstances that could give rise to termination of the proposed
transaction agreement; the failure of Calpine’s stockholders to
adopt the merger agreement; operating costs, customer loss and
business disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) may be greater than expected following the announcement
of the proposed transaction; the retention of certain key employees
at Calpine; risks associated with the disruption of management’s
attention from ongoing business operations due to the proposed
transaction; the inability to obtain necessary regulatory approvals
of the proposed transaction or the receipt of such approvals
subject to conditions that are not anticipated; the risk that a
condition to closing the transaction may not be satisfied on a
timely basis or at all; the risk that the proposed transaction
fails to close for any other reason; the outcome of any legal
proceedings related to the proposed transaction; the parties’
ability to meet expectations regarding the timing and completion of
the proposed transaction; the impact of the proposed transaction on
Calpine’s credit rating; and other risks described in Calpine’s
Form 10-K, Form 10-Q and Form 8-K reports filed with the SEC.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Except as otherwise required by law, Calpine does not undertake any
obligation, and expressly disclaims any obligation, to update,
alter or otherwise revise any forward-looking statements, whether
written or oral, that may be made from time to time, whether as a
result of new information, future events or otherwise.
Additional Information and Where to Find It
This communication may be deemed solicitation material in
respect of the proposed acquisition of Calpine by ECP. This
communication does not constitute a solicitation of any vote or
approval. In connection with the proposed transaction, Calpine
plans to file with the SEC preliminary and definitive proxy
statements and other relevant documents. The definitive proxy
statement (when available) will be mailed to Calpine’s
stockholders. INVESTORS AND SECURITYHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS
TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED
TRANSACTION BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH
RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a
free copy of the proxy statement (when available) and other
documents filed by Calpine with the SEC from the SEC’s website at
www.sec.gov. In addition, investors and security holders may obtain
free copies of the documents filed with the SEC at Calpine’s
website at www.calpine.com/investor-relations.
Participants in the Solicitation
Calpine and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from Calpine’s
stockholders in connection with the proposed transaction. Investors
and security holders may obtain more detailed information regarding
the names, affiliations and interests of Calpine’s directors and
executive officers by reading Calpine’s Annual Report on Form 10-K,
which was filed with the SEC on February 10, 2017, and proxy
statement for its 2017 annual meeting of stockholders, which was
filed with the SEC on March 29, 2017. Additional information
regarding potential participants in such proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be included in the proxy statement and
other relevant documents filed by Calpine with the SEC in
connection with the proposed transaction when they become
available.
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version on businesswire.com: http://www.businesswire.com/news/home/20170818005196/en/
For CalpineMedia Relations:Brett Kerr,
713-830-8809brett.kerr@calpine.comorInvestor
Relations:Bryan Kimzey,
713-830-8775bryan.kimzey@calpine.comorSard Verbinnen &
Co.Frances Jeter (Houston) / Jared Levy & Patrick Scanlan
(New York)832-687-5120 /
212-687-8080Calpine-SVC@sardverb.comorFor Energy Capital
Partners:Paul Parshley,
973-671-6106pparshley@ecpartners.com
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