Acquisitions and Divestitures

Acquisition of North American Power

On January 17, 2017, we, through an indirect, wholly-owned subsidiary, completed the purchase of 100% of the outstanding limited liability company membership interests in North American Power for approximately $105 million, excluding working capital and other adjustments. North American Power is a retail energy supplier for homes and small businesses and is primarily concentrated in the Northeast U.S. where Calpine has a substantial power generation presence and where Champion Energy has a substantial retail sales footprint that is enhanced by the addition of North American Power, which has been integrated into our Champion Energy retail platform. We funded the acquisition with cash on hand and the purchase price is allocated to the net assets of the business including intangible assets for the value of customer relationships and goodwill. The goodwill recorded associated with our acquisition of North American Power is deductible for tax purposes. The purchase price allocation was finalized during the fourth quarter of 2017 which did not result in any material adjustments. The pro forma incremental effect of North American Power on our results of operations for each of the years ended December 31, 2017 and 2016 is not material.

Acquisition of Calpine Solutions, formerly Noble Solutions

On December 1, 2016, through our indirect, wholly-owned subsidiaries Calpine Energy Services Holdco II, LLC and Calpine Energy Financial Holdings, LLC, we completed the purchase of Calpine Solutions, formerly Noble Solutions, along with a swap contract from Noble Americas Gas & Power Corp. and Noble Group Limited for approximately $800 million plus approximately $350 million of net working capital. We recovered approximately $250 million in cash subsequent to closing and recovered an additional approximately $200 million through collateral synergies and the runoff of acquired legacy hedges, substantially within the first year. Calpine Solutions is a commercial and industrial retail electricity provider with customers in 20 states in the U.S., including presence in California, Texas, the Mid-Atlantic and Northeast, where our wholesale power generation fleet is primarily concentrated. The acquisition of this large direct energy sales platform is consistent with our stated goal of getting closer to our end-use customers and expands our retail customer base, complementing our existing retail business while providing us a valuable sales channel for reaching a much greater portion of the load we seek to serve. We funded the acquisition with a combination of cash on hand and debt financing. The results of Calpine Solutions are reflected in our Retail segment.

The following table summarizes the consideration paid for Calpine Solutions as well as the preliminary determination of the identifiable assets acquired and liabilities assumed at the December 1, 2016 acquisition date (in millions):



Consideration	$	1,150

Identifiable assets acquired and liabilities assumed:
Assets:
Current assets	141
Margin deposits and other prepaid expense	518
Derivative assets, current⁽¹⁾	365
Property, plant and equipment, net	7
Intangible assets⁽²⁾	360
Goodwill	162
Long-term derivative assets⁽¹⁾	359
Total assets acquired	1,912
Liabilities:
Current liabilities	276
Derivative liabilities, current⁽¹⁾	270
Long-term derivative liabilities⁽¹⁾	216
Total liabilities assumed	762
Net assets acquired	$	1,150

____________


(1)	Consists of acquired customer and wholesale contracts which will be substantially amortized over 5 years.


(2)	Consists primarily of customer relationships that are being amortized over 14 years. See Note 3 for a further description of our intangible assets.

We recorded goodwill of $162 million, all of which is deductible for tax purposes, in connection with the acquisition of Calpine Solutions which represent the excess of the purchase price over the fair values of Calpine Solution’s assets and liabilities. The goodwill acquired was allocated to our Retail segment. The purchase price allocation was finalized during the fourth quarter of 2017 which did not result in any material adjustments.

The revenue and earnings of Calpine Solutions since its acquisition on December 1, 2016 are not material to our Consolidated Statements of Operations for the year ended December 31, 2016.

The following table summarizes the unaudited pro forma operating revenues and net income attributable to Calpine for the periods presented as if Calpine Solutions was acquired on January 1, 2015. The unaudited pro forma information has been prepared by adding the preliminary, unaudited historical results of Calpine Solutions, as adjusted for amortization of intangible assets and acquired contracts (using the preliminary values assigned to the net assets acquired from Calpine Solutions disclosed above) and interest expense from our 2017 First Lien Term Loan which funded a portion of the purchase price, to our results for the periods indicated below (in millions).



	2016
	(Unaudited)
Operating revenues	$	8,324
Net income attributable to Calpine	$	105

Acquisition of Granite Ridge Energy Center

On February 5, 2016, we, through our indirect, wholly-owned subsidiary Calpine Granite Holdings, LLC, completed the purchase of Granite Ridge Energy Center, a power plant with a nameplate capacity of 745 MW (summer peaking capacity of 695 MW), from Granite Ridge Holdings, LLC, for approximately $500 million, excluding working capital and other adjustments. The addition of this modern, efficient, natural gas-fired, combined-cycle power plant increased capacity in our East segment, specifically the constrained New England market. Beginning operations in 2003, Granite Ridge Energy Center is located in Londonderry, New Hampshire and features two combustion turbines, two heat recovery steam generators and one steam turbine. We funded the acquisition with a combination of cash on hand and a portion of our 2023 First Lien Term Loans obtained in the fourth quarter of 2015, and the purchase price was primarily allocated to property, plant and equipment. The purchase price allocation was finalized during the first quarter of 2017 and did not result in any material adjustments or the recognition of goodwill. The pro forma incremental effect of Granite Ridge Energy Center on our results of operations for the year ended December 31, 2016 is not material.

Sale of Osprey Energy Center

On January 3, 2017, we completed the sale of our Osprey Energy Center to Duke Energy Florida, Inc. for approximately $166 million, excluding working capital and other adjustments. This transaction supports our effort to divest non-core assets outside our strategic concentration. We recorded a gain on sale of assets, net of approximately $27 million during the year ended December 31, 2017 associated with the sale of the Osprey Energy Center.

Sale of Mankato Power Plant

On October 26, 2016, we, through our indirect, wholly-owned subsidiaries, New Steamboat Holdings, LLC and Mankato Holdings, LLC, completed the sale of our Mankato Power Plant, a 375 MW natural gas-fired, combined-cycle power plant and 345 MW expansion project under advanced development located in Minnesota, to Southern Power Company, a subsidiary of Southern Company, for $396 million, excluding working capital and other adjustments. This transaction supports our effort to divest non-core assets outside our strategic concentration. We used the proceeds from the sale to partially fund the Calpine Solutions acquisition and for other corporate purposes. We recorded a gain on sale of assets, net of approximately $157 million during the year ended December 31, 2016, and our federal and state NOLs almost entirely offset the taxable gain from the sale.

South Point Energy Center

As a result of the denial by the Nevada Public Utility Commission of the sale of South Point Energy Center to Nevada Power Company in February 2017, we terminated the corresponding asset sale agreement (originally executed on April 1, 2016) in the first quarter of 2017. During the first quarter of 2017, we reclassified the assets of South Point Energy Center from current assets held for sale to held and used at fair value.