Calpine $650M Convertible Notes Rated 'CCC+' by Fitch.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned a 'CCC+' rating and Rating Watch Evolving status to Calpine Corp.'s (CPN CPN Communist Party of Nepal CPN Commercial Property News CPN Civic Practices Network CPN Calling Party Number CPN Community Psychiatric Nurse (UK) CPN Cisco Powered Network CPN Connaitre et Proteger la Nature ) $650 million 7.75% contingent convertible notes due June 2015. Proceeds from the new notes will be utilized to redeem in full CPN's outstanding High Tides III trust preferred securities (issued by Calpine Capital Trust III) and repurchase a portion of CPN's 8.5% senior notes due 2011. Fitch expects to withdraw its current 'CCC' rating for CPN's outstanding High Tides III securities upon completion of the redemption. The new notes rank pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. and bear the same rating as approximately $4.7 billion of outstanding CPN senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. obligations. The notes are convertible into cash and shares of CPN common stock anytime after May 31, 2014 or earlier based on certain circumstances including the trading value of the underlying notes and/or CPN's common stock. In addition, the notes are convertible upon the occurrence of certain corporate transactions including a 'change in control.' Based on the various conversion mechanisms stated in the terms and conditions, the maximum amount of notes CPN would potentially have to settle in cash would approximate the $650 million face value of the notes. CPN's outstanding credit ratings remain on Rating Watch Evolving status where they were placed on May 25, 2005 following CPN's announcement of an expanded asset sale program and accelerated $3.0 billion debt reduction target by year-end 2005. Since that time, CPN has made good progress toward achieving its goals. Today, CPN announced an agreement to monetize its remaining U.S. natural gas reserves for $1.05 billion, proceeds of which will be utilized to fund the previously announced tender offer for CPN's $785 million first lien secured notes due 2014. This follows the announced sale of CPN's U.K. based Saltend plant for the equivalent of $906 million and a nonbinding agreement to divest four generating plants for $357 million. In addition, CPN has completed approximately $378.1 million of project financings Project financing A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis. , which could return up to $166.2 million net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). back to CPN. Fitch continues to monitor CPN's progress in reducing debt and achieving its stated operating cost reduction targets. Full realization of the planned debt retirements and simplification of CPN's capital structure could have positive credit implications, while failure to achieve the full benefits from these initiatives will likely lead to more aggressive restructuring measures that Fitch would consider inconsistent to its existing rating levels. Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies, and relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from this site, at all times. This document will remain on the public site for seven days. |
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