so many individual project finance loans in such a short time, especially considering that
about a dozen banks are required to syndicate each deal. Manpower and credit limits were
becoming stretched even in Calpine’s most dedicated relationship banks. In addition, the
lending capacity of the traditional bank project finance market was insufficient to meet the
company’s needs. It needed to tap the capital markets as well.
Under the CCFC setup Credit Suisse First Boston served as lead arranger, syndication
agent and bookrunner, while Bank of Nova Scotia was lead arranger and administrative agent.
CIBC and TD Securities acted as Arrangers and co-documentation agents.
CCFC II
The innovative construction pool introduced with CCFC was so successful that Calpine
returned to the market just a year later, in 2000, with CCFC II, a much larger US$2.5 billion
facility that took the revolver concept one step further. Borrowings were slated not only for
new plants but also to fund the advance purchase of turbines. To reach its target capacity of
70,000 MW the company planned to purchase 220 turbines for about US$7 billion between
2001 and 2006. With CCFC and CCFC II Calpine anticipated that it would be able to finance
the construction of about 50 power plants.
Credit Suisse First Boston again served as lead arranger and administrative agent, while
Bank of Nova Scotia was lead arranger, syndication agent and bookrunner. Bank of America
and ING (US) Capital acted as arrangers and syndication agents, while CIBC, TD Securities,
Bayerische Landesbank and Dresdner Bank were arrangers and co-documentation agents.
Universal shelf offering
At about the same time that the CCFC II facility was arranged Calpine raised US$1 billion in
high-yield debt, US$517.5 million in convertible bonds and US$800 million in additional
equity. In October 2000 the company filed for a universal shelf offering with the US
Securities and Exchange Commission, so that it would have the flexibility to sell up to
US$1.15 billion in common and preferred stock and debt securities in various amounts at var-
ious times depending on market conditions. Calpine’s management anticipated that it would
need up to US$1 billion in external financing each year over the next four years if it were to
fulfil its growth plans.
Risk considerations and credit ratings
Construction risk mitigation
Power plants are often subject to construction delays. Calpine estimates that a two-week
delay in completing a 500 MW plant would cost US$575,000 in net income. The company
minimises this risk and achieves a cost advantage with a roving staff that troubleshoots every
site, signs off on design changes and orders parts in bulk.
Natural gas supply
Calpine has estimated that, assuming that its construction plan is fully implemented, by
2004 its plants will need 2.6 trillion cubic feet of natural gas per year, about 10 per cent of
CALPINE, UNITED STATES