Calgary, Alberta, and San Jose, CA, Jan. 30, 2006 — Calpine Power Income Fund (the “Fund”) has announced that arrangements are now in place that prevent a default related to the bankruptcy of Calpine Corp., from occurring under the Fund’s King City project financing.
The Fund in May 2004 acquired a 120-megawatt natural gas fired cogeneration facility, the King City Facility, in King City, California and leased it to a subsidiary, Calpine King City, of Calpine Corp., pursuant to a lease. The Fund financed the acquisition through a loan agreement under which King City LP (KCLP), a subsidiary of the Fund, borrowed approximately U.S. $82 million from a U.S. financial institution.
As was disclosed in a material change report filed by the Fund on January 4, 2006, the filing of the voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code by Calpine Corp. could have resulted in a “lease event of default” under the lease.
On January 19, 2006, KCLP, Calpine King City and the lender reached an agreement whereby Calpine King City agreed to cause approximately U.S. $11.7 million of its lease cash flow to be retained in a depositary account and applied as needed to make specified payments to the lender. Calpine King City also agreed that its 2006 lease cash flow would be added to the aforementioned depositary account until aggregate deposits total U.S. $20 million. The lender agreed that these Calpine King City commitments would satisfy the Acceptable Credit Assurance obligation and avoid a default on the loan.
In other Calpine news, Calpine Corp. announced the appointment of Scott Davido as chief financial officer effective February 1, 2006. Mr. Davido most recently held the position of executive vice president and president of the Northeast Region for NRG Energy Inc.
Eric N. Pryor, who had been serving as interim CFO, will return to his position as deputy CFO and chief risk officer.
For related stories about Calpine Corp., please read these articles: