8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 17, 2014

CALPINE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-12079	77-0212977
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

717 Texas Avenue, Suite 1000, Houston, Texas 77002

(Addresses of principal executive offices and zip codes)

Registrant’s telephone number, including area code: (713) 830-2000

Not applicable

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

ITEM 1.01 — ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT	2
ITEM 7.01 — REGULATION FD	2
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS	3
SIGNATURES	4
EXHIBIT INDEX	5

1

ITEM 1.01 – ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On April 18, 2014, Calpine Corporation (“Calpine”) announced that it entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Calpine Project Holdings, Inc., an indirect wholly-owned subsidiary of Calpine (“CPH”), Calgen Expansion Company, LLC, an indirect wholly-owned subsidiary of Calpine (“CEC, and together with CPH, the “Sellers”), and NatGen Southeast Power LLC, a wholly-owned subsidiary of LS Power Equity Partners III, (“Purchaser”).

Pursuant to the Purchase Agreement, Purchaser has agreed, on the terms and subject to the conditions of the Purchase Agreement, to purchase from Sellers 100% of the limited liability company interests (collectively, the “Company Interests”) in (i) Mobile Energy LLC (“Mobile”), (ii) Santa Rosa Energy Center, LLC (“Santa Rosa”), (iii) Carville Energy, LLC, (iv) Decatur Energy Center, LLC, (v) Columbia Energy LLC and (vi) Calpine Oneta Power, LLC (collectively, the “Companies”), and thereby sell assets comprising 3,498 MW of combined-cycle generation capacity in Oklahoma, Louisiana, Alabama, Florida and South Carolina for a purchase price of $1.57 billion in cash, and subject to other adjustments including (i) the level of working capital and inventory at closing and (ii) actual capital expenditures relative to budgeted capital expenditures through the closing date. The transaction is targeted to close during the second quarter of 2014. Effective June 1, 2014, the purchase price will be subject to a per diem reduction for each day closing does not occur from and after June 1, 2014. As part of the transaction, Calpine has agreed to provide the Purchaser with certain spare parts by closing and other spare parts within specified periods, certain of which must be returned after a specified period.

The obligations of the parties under the Purchase Agreement are subject to various closing conditions, including, among others: (i) obtaining required governmental and third party consents and approvals, (ii) the absence of legal restraints that would make the transactions contemplated by the Purchase Agreement illegal or otherwise prevent the consummation thereof and (iii) terminating all required waiting periods applicable to the Purchase Agreement and the transactions contemplated thereby under the HSR Act. In addition, the obligations of Sellers and Purchaser are subject to certain other conditions, including: (i) the procurement of an order from FERC, authorizing the purchase and sale of the Company Interests pursuant to Section 203 of the Federal Power Act, (ii) consent of certain power customers and transportation providers to assignment of contracts and certain contract amendments, (iii) causing the Companies to operate and maintain the facilities in the ordinary course of business consistent with past practice and good industry practice, including (a) preserving the present business organization and reputation of the Companies, (b) maintaining the assets and properties of the Companies in good working order and condition and meeting certain availability targets, (c) maintaining the goodwill of certain key persons with whom the Companies have significant business relationships, (d) completion of certain maintenance activities and (e) refraining from taking certain actions before closing. In addition, all parties have agreed to use reasonable commercial efforts to take, or cause to be taken, all action, and to do, or cause to be done, and to assist and cooperate with each other in doing, all things necessary, proper or advisable to consummate and make effective, the transactions contemplated by the Purchase Agreement, including obtaining consents and approvals, and executing any additional instruments reasonably necessary to consummate the transactions contemplated by the Purchase Agreement.

The parties have agreed to customary indemnifications for breaches of representations, warranties or covenants made by the parties under the Purchase Agreement. The indemnifications for breaches of representations and warranties are capped at $157 million (except with respect to specific representations and in the case of fraud, bad faith or willful misconduct) and subject to a $15.7 million deductible. In addition, Purchaser has agreed to indemnify Sellers for specific matters identified in the Purchase Agreement.

The Purchase Agreement contains customary termination rights for the parties. In addition, the Purchase Agreement may be terminated at any time by Sellers or Purchaser if the closing fails to occur before October 14, 2014. If the Purchase Agreement is terminated by Sellers due to Purchaser’s default, Sellers’ sole and exclusive remedy is Purchaser’s payment of $109.9 million. If the Sellers default, the Purchaser may seek specific performance or contract damages subject to a limitation of $109.9 million.

ITEM 7.01 - REGULATION FD

On April 18, 2014, Calpine Corporation announced that it entered into a Purchase and Sale Agreement with Calpine Project Holdings, Inc., an indirect wholly-owned subsidiary of Calpine, Calgen Expansion Company, LLC, an indirect wholly-owned subsidiary of Calpine, and NatGen Southeast Power LLC, a wholly-owned subsidiary of LS Power Equity Partners III. A copy of the press release is being furnished as Exhibit 99.1.

The information in this Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), nor shall it be deemed “incorporated by reference” into any filing under the Securities Act of 1933, as amended, or the 1934 Act, except as may be expressly set forth by specific reference in such filing.

2

ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

Exhibit No.	Description
99.1	Calpine Corporation Press Release dated April 18, 2014.*

* Furnished herewith.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CALPINE CORPORATION
By:	/s/ ZAMIR RAUF
	Zamir Rauf
	Executive Vice President and
	Chief Financial Officer

Date: April 22, 2014

4

EXHIBIT INDEX

Exhibit No.	Description
99.1	Calpine Corporation Press Release dated April 18, 2014.*

* Furnished herewith.

5

EX-99.1

EXHIBIT 99.1

CONTACTS:	NEWS RELEASE
Media Relations:	Investor Relations:
Brett Kerr	Bryan Kimzey
713-830-8809	713-830-8775
brett.kerr@calpine.com	bryan.kimzey@calpine.com

Calpine Agrees to Sell Six Southeast Power Plants for $1.57 Billion

To Divest 3.5 GW of Non-core Assets

Transaction Highlights:

• Unlocks shareholder value from non-core, underappreciated assets

• Accelerates utilization of net operating losses to offset projected taxable gains

• Divesting expected full year 2014 Adjusted EBITDA and Adjusted Free Cash Flow of approximately $100 million and $70 million, respectively

• Capital redeployment expected to be accretive to Adjusted Free Cash Flow Per Share

(HOUSTON, Texas) April 18, 2014 – Calpine Corporation (NYSE:CPN) today announced that it has agreed to sell six power plants in its Southeast region to LS Power for $1.57 billion in cash, subject to working capital and other adjustments. The portfolio of assets comprises 3,498 MW of combined-cycle generation capacity in Oklahoma, Louisiana, Alabama, Florida and South Carolina.

“Today’s announcement represents substantial progress toward the achievement of one of our top strategic priorities – the monetization of our Southeast portfolio,” said Calpine’s Chief Executive Officer Jack Fusco. “This transaction enables us to capture that value for our shareholders today, to accelerate the usage of our net operating losses and to deliver meaningful Adjusted Free Cash Flow Per Share accretion.

“Consistent with our track record, we will continue to be opportunistic in our deployment of the capital generated from this sale, whether paying down debt, investing in acquisition or development opportunities or repurchasing our own shares of common stock,” added Fusco. “Meanwhile, I want to thank the talented professionals at these plants for their dedication to operational excellence that has helped advance Calpine toward its vision of being the premier power generation company in the United States.”

Calpine expects to utilize existing federal and state net operating losses to almost entirely offset the projected taxable gains from the sale. In addition, none of the assets included in the transaction are directly encumbered with project debt. Therefore, the transaction is expected to result in net cash proceeds of approximately $1.53 billion, which the company intends to allocate in a balanced manner that maintains leverage neutrality and is accretive to Adjusted Free Cash Flow Per Share.

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Calpine Agrees to Sell Six Southeast Power Plants for $1.57 Billion

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April 18, 2014

The six assets included in the transaction represent an aggregate capacity of 3,498 MW of combined-cycle generation resources:

Plant Name	Plant Capacity		Location
Oneta Energy Center		1,134 MW	Coweta, OK
Carville Energy Center(1)		501 MW	St. Gabriel, LA
Decatur Energy Center		795 MW	Decatur, AL
Hog Bayou Energy Center		237 MW	Mobile, AL
Santa Rosa Energy Center		225 MW	Pace, FL
Columbia Energy Center(1)		606 MW	Calhoun County, SC
Total		3,498 MW

⁽¹⁾  Indicates combined-cycle cogeneration power plant.

The divestiture of these assets will better align Calpine’s asset base with its strategic focus on competitive wholesale power markets, most notably those in its core regions: the Western U.S. (particularly California), Texas and the Eastern U.S. (particularly the Mid-Atlantic). Following the close of the sale, Calpine will retain ownership of four natural gas-fired power plants located in the Southeast totaling 1,738 MW in Arkansas, Alabama and Florida. The Company will continue to pursue opportunities to monetize the value of these assets through contract or sale, consistent with its strategic objectives.

Along with the power plants and related assets, the transaction also includes the sale of customary parts and services. The transaction is expected to close in the second quarter of 2014, pending receipt of necessary regulatory approvals and third-party consents. LS Power and its affiliates have agreed not to trade in the Company’s stock until the close of the transaction.

White and Case LLP served as Calpine’s outside legal counsel in this transaction.

About Calpine

Calpine Corporation generates more electricity than any other independent power producer in America, with a fleet of 94 power plants in operation or under construction, representing more than 29,000 megawatts of generation capacity. Serving customers in 20 states and Canada, we specialize in developing, constructing, owning and operating natural gas-fired and renewable geothermal power plants that use advanced technologies to generate power in a low-carbon and environmentally responsible manner. Our clean, efficient, modern and flexible fleet is uniquely positioned to benefit from the secular trends affecting our industry, including the abundant and affordable supply of clean natural gas, stricter environmental regulation, aging power generation infrastructure and the increasing need for dispatchable power plants to successfully integrate intermittent renewables into the grid. We focus on competitive wholesale power markets and advocate for market-driven solutions that result in nondiscriminatory forward price signals for investors. Please visit www.calpine.com to learn more about why Calpine is a generation ahead – today.

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Calpine Agrees to Sell Six Southeast Power Plants for $1.57 Billion

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April 18, 2014

Non-GAAP Financial Measures

Calpine provides certain non-GAAP financial measures to investors because it believes they are useful to investors and other users of its financial statements in evaluating operating performance by providing them with an additional tool to compare business performance across companies and across periods. As used in this press release, the terms Adjusted EBITDA and Adjusted Free Cash Flow with respect to certain full year 2014 results for the divested assets are consistent with the definitions of such terms in Calpine’s earnings releases which can be accessed via the SEC’s website at www.sec.gov and are as follows:

Adjusted EBITDA represents net income (loss) attributable to Calpine before net (income) loss attributable to the noncontrolling interest, interest, taxes, depreciation and amortization, adjusted for certain non-cash and non-recurring items. Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) as defined by U.S. GAAP as an indicator of operating performance and is not necessarily comparable to similarly titled measures reported by other companies.

Adjusted Free Cash Flow represents net income before interest, taxes, depreciation and amortization, as adjusted, less operating lease payments, major maintenance expense and maintenance capital expenditures, net cash interest, cash taxes and other adjustments, including non-recurring items. Adjusted Free Cash Flow is a performance measure and is not intended to represent net income (loss), the most directly comparable U.S. GAAP measure, or liquidity and is not necessarily comparable to similarly titled measures reported by other companies.

A reconciliation of such expected non-GAAP financial measures to the most directly comparable GAAP measure for the divested assets is not included at this time since it is not currently available without unreasonable effort due to the fact that the Company has not traditionally maintained such information on a separate basis for the divested assets; however, the Company intends to provide updated guidance and related reconciliations for its 2014 operations as a whole giving effect to the expected divestiture in its quarterly earnings release for the first quarter of 2014.

Forward-Looking Information

In addition to historical information, this release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will,” “should,” “estimate,” “potential,” “project” and similar expressions identify forward-looking statements. Such statements include, among others, those concerning expected financial performance and strategic and operational plans, as well as assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Please see the risks identified in this release or in Calpine’s reports and registration statements filed with the Securities and Exchange Commission, including, without limitation, the risk factors identified in its Annual Report on Form 10-K for the year ended Dec. 31, 2013. These filings are available by visiting the Securities and Exchange Commission’s website at www.sec.gov or Calpine’s

Calpine Agrees to Sell Six Southeast Power Plants for $1.57 Billion

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April 18, 2014

website at www.calpine.com. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Many of these factors are beyond our ability to control or predict. Our forward-looking statements speak only as of the date of this release. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and, other than as required by law, Calpine undertakes no obligation to update any such statements, whether as a result of new information, future events, or otherwise.

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