Energy Business Review: August 21, 2017

Energy Capital Partners-led consortium to acquire Calpine for $5.6bn

Energy Capital Partners and an investor consortium have entered into an agreement to acquire US-based electricity generator Calpine for $5.6bn.

The consortium includes Access Industries and Canada Pension Plan Investment Board.

The transaction is a result of a competitive strategic review process undertaken by Calpine.

Calpine’s board of directors chairman Frank Cassidy said: “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.”

Under the terms of the agreement, Calpine will have a 45-day “go-shop” period, during which the company can enter into negotiations with parties that offer superior alternative proposals.

In the event of a superior proposal, Calpine has to pay a termination fee of $142m to the investor consortium.

The transaction is subject to approval by stockholders representing a majority of outstanding shares of common stock of Calpine.

Besides, it requires an approval from Federal Energy Regulatory Commission (FERC), New York Public Service Commission (NYPSC), the Public Utility Commission of Texas (PUCT) and other states, as necessary.

It is expected to be completed in the first quarter of 2018.

Calpine is one of the major producers of electricity from natural gas and geothermal resources. Currently, it has 80 power plants in operation or under construction, with a combined generation capacity of nearly 26,000MW.

Energy Capital Partners partner Tyler Reeder said: “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.”

In October last year, Calpine entered into an agreement to buy Noble Group’s subsidiary Noble Americas Energy Solutions (NAES), an independent supplier of power to commercial and industrial retail customers, for $1.05bn.

 

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