CPN Calpine Corp.

SAN JOSE, Calif., Sept. 27 /PRNewswire-FirstCall/ -- Calpine Corporation (NYSE:CPN) has filed an action in the Delaware Court of Chancery against The Bank of New York, as collateral trustee (Collateral Trustee) for Calpine's Senior Secured Note Holders, and Wilmington Trust Company, as indenture trustee for Calpine's First Priority Senior Secured Notes (First Lien Notes). Calpine filed the action in response to the Collateral Trustee's recent withholding of Calpine withdrawals from the account in which the company had deposited proceeds from its July 2005 domestic gas asset sale. The lawsuit seeks a declaration that Calpine's past and proposed purchases of natural gas assets are permitted by the indenture for the First Lien Notes and related documents, and seeks an injunction compelling the Collateral Trustee to release the funds requested to be withdrawn for this purpose. Last week, the Collateral Trustee informed Calpine that certain unidentified holders of Calpine's First Lien Notes have raised disagreements (which the holders had not previously communicated to Calpine) regarding the company's reinvestment of the gas sale proceeds. Acting through their counsel, these unidentified note holders objected to Calpine's proposed withdrawals and demanded that the company's previously withdrawn funds be returned to the gas sale proceeds account. Under Calpine's existing bond indentures, the gas sale proceeds were first offered to holders of the company's First Lien Notes. Of the $785 million First Lien Notes outstanding, approximately $139 million of notes were tendered to the company in response to Calpine's offer. The holders of the remaining First Lien Notes were given the opportunity to be bought out at par in the tender offer, and declined the opportunity. Accordingly, the indenture for the First Lien Notes affirmatively states that the company may use the remaining gas sale proceeds for "any purpose not otherwise prohibited by this indenture," including reinvestment in natural gas assets. Calpine has reinvested approximately $360 million of the gas sale proceeds to acquire natural gas assets. Following these acquisitions, approximately $400 million remains in the gas sale proceeds account with the Collateral Trustee. Calpine Corporation 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 and in three Canadian provinces. 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 http://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 including the 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 for the year ended December 31, 2004, and in its Quarterly Report on Form 10-Q for the three months ended June 30, 2005, which can also be found on the Company's website at http://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. DATASOURCE: Calpine Corporation CONTACT: media, Katherine Potter, +1-408-995-5115, Ext. 1168, or investors, Karen Bunton, +1-408-995-5115, Ext. 1121, both of Calpine Corporation Web site: http://www.calpine.com/

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