Calpine Agrees to be Acquired by Investor Consortium Led by Energy Capital Partners

HOUSTON–(BUSINESS WIRE)–Calpine Corporation (NYSE:CPN), America’s largest generator of
electricity from natural gas and geothermal resources, today announced
that it has entered into a definitive agreement under which Energy
Capital Partners (Energy Capital or ECP) along with a consortium of
investors led by Access Industries and Canada Pension Plan Investment
Board will acquire Calpine for $15.25 per share in cash, or $5.6
billion. The purchase price represents an approximately 51% premium to
Calpine’s unaffected share price of $10.07 on May 9, 2017, the day prior
to initial media speculation of a transaction. The transaction follows a
competitive strategic review process and was unanimously approved by
Calpine’s Board of Directors.

“We are very pleased to announce this proposed transaction and are
confident it is in the best interests of our shareholders and
stakeholders,” said Frank Cassidy, Chairman of Calpine’s Board of
Directors. “This transaction is the result of an exhaustive review of
strategic alternatives undertaken by our Board, with the assistance of
outside advisors, to maximize shareholder value and unlock the company’s
intrinsic value, while eliminating execution risk. We are confident that
this is the best outcome of that review and look forward to shareholder
approval.”

“We are excited to partner with Energy Capital, a leading private equity
investment firm focused on North American energy infrastructure and
power assets,” said Thad Hill, President and Chief Executive Officer of
Calpine. “With ECP, Calpine will be able to operate as it always has –
executing on our strategic objectives of providing safe and reliable
power and serving our retail and wholesale customers with differentiated
products and services. We will also continue to strengthen our wholesale
power generation footprint, while benefiting from ECP’s support,
industry expertise and long-term investment horizon. In short, Calpine
will continue to be the nation’s premier competitive power company.”

Tyler Reeder, a partner at Energy Capital Partners, stated: “We look
forward to joining forces with Calpine’s talented team as they continue
executing their strategy. We see significant value in Calpine’s
operational excellence and strong and stable cash flows and have been
impressed by the Company’s exceptional leadership and talented
employees. We do not expect to make any changes to the way Calpine
operates its business and intend to remain focused on providing the high
level of service to which Calpine’s wholesale and retail customers have
become accustomed. Finally, we do not intend to make any changes to the
Company’s financial policy or previously announced $2.7 billion
deleveraging plan.”

Calpine will maintain its corporate headquarters in Houston, Texas with
the current management team expected to remain in place.

“Go-Shop” Period

The agreement includes a 45-day “go-shop” period, during which Calpine,
with the assistance of its legal and financial advisors, can actively
solicit, evaluate and potentially enter into negotiations with parties
that offer superior alternative proposals. The agreement provides for
the payment of a termination fee by Calpine of $142 million to the
investor consortium in the event that the agreement is terminated for a
superior proposal; except that the termination fee will be $65 million
if Calpine terminates the agreement for a superior proposal from certain
exempted persons prior to 12:01 a.m., Eastern time, on the 106th day
after the date of the agreement. There can be no assurance that this
process will result in a superior proposal. Calpine does not intend to
disclose developments during this process unless and until its Board has
made a decision with respect to any potential superior proposal.

Stockholder and Regulatory Approval

The proposed transaction is subject to approval by stockholders
representing a majority of outstanding shares of common stock of
Calpine. In addition, the transaction is subject to expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act. Other necessary regulatory filings include
Federal Energy Regulatory Commission (FERC), New York Public Service
Commission (NYPSC), the Public Utility Commission of Texas (PUCT) and
other states, as necessary.

The parties currently expect the transaction to close in the first
quarter of 2018.

Investor Consortium Funding

Along with Energy Capital Partners, the investor consortium is led by
Access Industries and Canada Pension Plan Investment Board. An entity
wholly owned and controlled by ECP and its consortium will fund 100% of
the equity required to consummate the transaction. The transaction is
not subject to a financing condition. Calpine expects both Standard and
Poor’s and Moody’s Investors Service to affirm Calpine’s credit ratings.

Financial and Legal Advisors

Lazard is serving as financial advisor and White & Case LLP as legal
advisor to Calpine. Barclays Capital Inc. is serving as financial
advisor and Latham & Watkins LLP as legal advisor to Energy Capital
Partners.

About Calpine

Calpine Corporation is America’s largest generator of electricity from
natural gas and geothermal resources with operations in competitive
power markets. Our fleet of 80 power plants in operation or under
construction represents approximately 26,000 megawatts of generation
capacity. Through wholesale power operations and our retail businesses Calpine
Energy Solutions and Champion
Energy, we serve customers in 25 states, Canada and Mexico. Our
clean, efficient, modern and flexible fleet uses advanced technologies
to generate power in a low-carbon and environmentally responsible
manner. We are uniquely positioned to benefit from the secular trends
affecting our industry, including the abundant and affordable supply of
clean natural gas, environmental regulation, aging power generation
infrastructure and the increasing need for dispatchable power plants to
successfully integrate intermittent renewables into the grid. Please
visit www.calpine.com
to learn more about how Calpine is creating power for a sustainable
future.

Calpine’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2017, has been filed with the Securities and Exchange Commission (SEC)
and is available on the SEC’s website at www.sec.gov.

About Energy Capital Partners

Energy Capital Partners is a private equity and credit investment firm
with over $13 billion in capital commitments. The firm focuses on
investing in the traditional and renewable power generation, midstream
oil and gas, electric transmission, environmental infrastructure and
related energy services sectors of North America’s energy
infrastructure. For more information, visit www.ecpartners.com.

About Access Industries

Access Industries is a privately held, U.S.-based industrial group with
global strategic investments. Founded in 1986 by Len Blavatnik, an
American entrepreneur and philanthropist, the group is headquartered in
New York, with offices in London and Moscow. Access invests in
industries where it can maximize long-term value by developing regional
and global leaders. Its industrial focus spans four key sectors: natural
resources and chemicals; media and telecommunications; real estate and
hospitality; and venture capital. For more information, visit www.accessindustries.com.

About Canada Pension Plan Investment Board

Canada Pension Plan Investment Board (CPPIB) is a professional
investment management organization that invests the funds not needed by
the Canada Pension Plan (CPP) to pay current benefits on behalf of 20
million contributors and beneficiaries. In order to build a diversified
portfolio of CPP assets, CPPIB invests in public equities, private
equities, real estate, infrastructure and fixed income instruments.
Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg,
Mumbai, New York City, São Paulo and Sydney, CPPIB is governed and
managed independently of the Canada Pension Plan and at arm’s length
from governments. At June 30, 2017, the CPP Fund totaled C$326.5
billion. For more information about CPPIB, please visit www.cppib.com
or follow us on LinkedIn or Twitter.

Forward Looking Statements

This communication contains certain information, including financial
estimates and statements as to the expected timing, completion and
effects of the proposed merger involving Calpine and ECP, which may
constitute forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are subject to risks and
uncertainties, and actual results may differ materially. Such forward
looking statements include, among others, statements about the benefits
of the proposed transaction, including future financial and operating
results, plans, objectives, expectations for Calpine and other
statements that are not historical facts. Such statements are based on
the current beliefs and expectations of the management of Calpine and
are subject to significant risks and uncertainties outside of Calpine’s
control. These risks and uncertainties include the possibility that the
anticipated benefits from the proposed transaction with ECP will not be
realized, or will not be realized within the expected time periods; the
occurrence of any event, change or other circumstances that could give
rise to termination of the proposed transaction agreement; the failure
of Calpine’s stockholders to adopt the merger agreement; operating
costs, customer loss and business disruption (including, without
limitation, difficulties in maintaining relationships with employees,
customers, clients or suppliers) may be greater than expected following
the announcement of the proposed transaction; the retention of certain
key employees at Calpine; risks associated with the disruption of
management’s attention from ongoing business operations due to the
proposed transaction; the inability to obtain necessary regulatory
approvals of the proposed transaction or the receipt of such approvals
subject to conditions that are not anticipated; the risk that a
condition to closing the transaction may not be satisfied on a timely
basis or at all; the risk that the proposed transaction fails to close
for any other reason; the outcome of any legal proceedings related to
the proposed transaction; the parties’ ability to meet expectations
regarding the timing and completion of the proposed transaction; the
impact of the proposed transaction on Calpine’s credit rating; and other
risks described in Calpine’s Form 10-K, Form 10-Q and Form 8-K reports
filed with the SEC. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
hereof. Except as otherwise required by law, Calpine does not undertake
any obligation, and expressly disclaims any obligation, to update, alter
or otherwise revise any forward-looking statements, whether written or
oral, that may be made from time to time, whether as a result of new
information, future events or otherwise.

Additional Information and Where to Find It

This communication may be deemed solicitation material in respect of the
proposed acquisition of Calpine by ECP. This communication does not
constitute a solicitation of any vote or approval. In connection with
the proposed transaction, Calpine plans to file with the SEC preliminary
and definitive proxy statements and other relevant documents. The
definitive proxy statement (when available) will be mailed to Calpine’s
stockholders. INVESTORS AND SECURITYHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS TO BE
FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BEFORE
MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED
TRANSACTION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors
and security holders may obtain a free copy of the proxy statement (when
available) and other documents filed by Calpine with the SEC from the
SEC’s website at www.sec.gov.
In addition, investors and security holders may obtain free copies of
the documents filed with the SEC at Calpine’s website at www.calpine.com/investor-relations.

Participants in the Solicitation

Calpine and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from Calpine’s stockholders
in connection with the proposed transaction. Investors and security
holders may obtain more detailed information regarding the names,
affiliations and interests of Calpine’s directors and executive officers
by reading Calpine’s Annual Report on Form 10-K, which was filed with
the SEC on February 10, 2017, and proxy statement for its 2017 annual
meeting of stockholders, which was filed with the SEC on March 29, 2017.
Additional information regarding potential participants in such proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will be included in the proxy
statement and other relevant documents filed by Calpine with the SEC in
connection with the proposed transaction when they become available.

Contacts

For Calpine
Media Relations:
Brett Kerr,
713-830-8809
[email protected]
or
Investor
Relations:
Bryan Kimzey, 713-830-8775
[email protected]
or
Sard
Verbinnen & Co.
Frances Jeter (Houston) / Jared Levy &
Patrick Scanlan (New York)
832-687-5120 / 212-687-8080
[email protected]
or
For
Energy Capital Partners:
Paul Parshley, 973-671-6106
[email protected]