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Calpine says delaying refinancing of CCFC II revolver creates little risk
By Sara Rosenberg
New York, Feb. 26 - Calpine Corp. expressed comfort with its decision to delay the refinancing of its Construction Finance Co. II LLC revolver during a conference call Thursday remarking that there is little risk in holding off on the transaction.
"We're reviewing alternatives, different structures, different capital markets. But, it's a quality asset with quality cash flow, and the refinancing risk in my mind is minimal," a company official said during the call.
"We went to the market place when it was hot. By the time we were done with the lawyers the market cooled off very quickly and we determined on Friday and Monday we didn't like the market conditions. We were under no great incentive to take 'a bad deal.' We would sit back a while and watch the market place for the next eight months," company officials added.
The $2.5 billion CCFC II credit facility matures in November and has about $2.3 billion in outstanding debt under it, including letters of credit.
The CCFC II revolver was expected to be refinanced with a $1.3 billion non-recourse first priority secured institutional term loan and a $1.05 billion secured notes offering. However, both of these transactions were officially pulled from the bank and bond markets on Tuesday due to market conditions. The $1.3 billion term loan was priced at Libor plus 475 basis points, increased from Libor plus 425 basis points at the end of last week, with a 1.5% Libor floor, 50 basis points original issue discount, non-call of two years and two years of call premiums. The $525 million floating-rate notes were talked at Libor plus 725 basis points, with a 1.5% Libor floor, 50 basis points original issue discount and seven-year non-call. Lastly, the $525 million fixed-rate notes were talked to yield 11¼%.
Deutsche Bank was the lead bank on both the bank and bond transactions.
Calpine is a San Jose, Calif.-based power company.
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