Blog Coverage Calpine Acquires Noble Group's US Energy Unit
LONDON, UK / ACCESSWIRE / October 11, 2016 / Active Wall St. blog coverage looks at the headline from Calpine Corp. (NYSE: CPN) as the company announced on October 09th, 2016, after the market close, that it has entered into an agreement to purchase Noble Americas Energy Solutions, LLC (NAES), the largest independent supplier of power to commercial and industrial retail customers in the United States, for a purchase price of $800 million plus an estimated $100 million of net working capital at closing. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
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Transaction Details
Calpine expects to recover approximately $200 million through collateral synergies and the runoff of acquired legacy hedges, substantially within the first year, resulting in expected net cash deployed of approximately $700 million, or approximately five times NAES' recent and expected run-rate adjusted EBITDA.
"We are excited to be acquiring the best commercial and industrial direct energy sales platform in the U.S. The acquisition of this well-regarded organization known for providing sophisticated customers with highly customized products is a natural fit with Calpine's customer-centric culture and will allow us to build upon the success we have experienced since our entry into retail last year through the Champion Energy platform," said Thad Hill, Calpine's President and Chief Executive Officer.
"Financially, this transaction is highly cash flow and credit accretive, given a rapidly amortizing bridge loan, the achievement of collateral synergies and the ongoing generation of stable and substantial cash flows," concluded Hill.
NAES
NAES is the American energy business for Singapore-based Noble Group Ltd. and it currently serves commercial and industrial customers in 18 states nationwide, including California, Texas, the Mid-Atlantic and Northeastern United States, where Calpine's wholesale power generation fleet is primarily concentrated. The organization will remain headquartered in San Diego and will continue to operate under the leadership of Jim Wood, President of NAES.
"The sale of NAES substantially completes the $2 billion capital-raising initiative that we announced in June," co-CEOs Jeff Frase and Will Randall said in their company's statement.
Noble had announced plans to sell in May 2016, at the same time that former-CEO Alireza put in his papers. He was succeeded by Randall and Frase.
Financial Nitty Gritty
Calpine expects to fund the acquisition with a combination of cash on hand and temporary bridge loan financing of up to $550 million. The company intends to repay the bridge facility in 2017 with proceeds from announced asset sales as well as cash from operations, including that generated from the anticipated collateral synergies. Under Calpine's ownership, anticipated collateral needs are expected to be met with approximately $240 million in letters of credit and $20 million of surety bonds, leaving almost $1.2 billion of Calpine Corporate Revolver capacity remaining at closing.
Approvals and Time to Close
The transaction is expected to close by year end 2016, subject to customary closing conditions, approval by shareholders of Noble Group Ltd, approval from the Federal Energy Regulatory Commission, and antitrust review under the Hart-Scott-Rodino Act.
Stock Performance
Following the announcement, at the closing bell, on Monday, October 10, 2016, Calpine's stock climbed 4.78%, ending the trading session at $13.15. A total volume of 7.37 million shares were traded at the end of the day, which was higher than the 3-month average volume of 4.33 million shares. The stock currently has a market cap of $4.64 billion.
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SOURCE: Active Wall Street
