Related to this potential sale of gas reserves, Calpine is currently working on the restructuring of certain of its power contracts from a fixed price arrangement to a capacity and variable energy agreement. Calpine has retained Waterous & Co. to act as its advisor for the sale of the Canadian gas reserves.
"Our equity gas reserves have provided us with an attractive hedge to our fixed price contract portfolio. With a restructuring of certain of our fixed price power contracts and the potential sale of these natural gas reserves, we not only enhance our liquidity position, but we also expect to preserve the margin of our power contracts," stated Bob Kelly, Calpine chief financial officer.
Net proceeds from any sale of the gas reserves would be used to repay the existing $500 million first lien indebtedness with remaining proceeds to be used in accordance with the asset sale provisions of Calpine's existing bond indentures. Following the repayment of its existing first lien indebtedness, Calpine would have the ability under its existing bond indentures to issue up to approximately $700 million of new first lien debt.
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