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Calpine Reports Fourth Quarter And Full Year 2012 Results, Raises Adjusted Free Cash Flow Per Share Guidance And Increases Share Repurchase Authorization By $400 Million

Consistent with our efforts to optimize and simplify our capital structure, during 2012, we entered into an $835 million first lien term loan, the proceeds of which were used to redeem 10% (or approximately $590 million) of our senior secured notes and to retire variable rate project-level BRSP debt (approximately $218 million remaining balance). The term loan, which amortizes at a rate of 1% per year, matures in 2019. The term loan currently bears interest at LIBOR plus 3.25% per annum (subject to a LIBOR floor of 1.25%). This transaction is expected to produce annual interest savings of approximately $25 million.

Subsequently, in February 2013, we repriced approximately $2.5 billion of our first lien term loans, including the aforementioned $835 million term loan. This repricing lowers the term loans’ LIBOR floor by 0.25% to 1.0% and lowers their applicable margin by 0.25% to 3.0%. We estimate that this repricing will produce additional annual interest savings of approximately $12 million. We expect this transaction to close in the second half of February.

Adjusted Free Cash Flow was $564 million in 2012, compared to $489 million in 2011. Adjusted Free Cash Flow increased during the period primarily due to lower interest expense associated with our refinancing efforts, as well as a $23 million increase in Adjusted EBITDA, as previously discussed. Lower major maintenance expenditures related to our plant outage schedule further contributed to the improvement in Adjusted Free Cash Flow.


Portfolio Optimization

During the fourth quarter of 2012, we completed the following transactions that allowed us to strategically redeploy capital:
  • the purchase of our Bosque Energy Center, an 800 MW modern, natural gas-fired combined-cycle power plant in Central Texas, for approximately $432 million, or $540/kW
  • the sale of our Broad River Energy Center, an 847 MW natural gas-fired peaking power plant in South Carolina, for approximately $427 million 5, or $504/kW and
  • the sale of our Riverside Energy Center, a 603 MW combined-cycle power plant in Wisconsin, for approximately $402 million, or $667/kW.

Share Repurchase Program

On August 23, 2011, we announced that our Board of Directors had authorized the repurchase of up to $300 million in shares of our common stock. In April 2012, our Board of Directors authorized us to double the size of our share repurchase program, increasing our permitted cumulative repurchases to $600 million in shares of our common stock. In early 2013, we completed this $600 million share repurchase program, having repurchased a total of approximately 35.6 million shares of our outstanding common stock at an average price paid of $16.87 per share. In February 2013, our Board of Directors authorized the repurchase of up to an additional $400 million in shares of our common stock, bringing the cumulative authorization total to $1.0 billion.

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