Valladolid III

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The Mexican government, under the Comision Federal de Electricidad (CFE), awarded a greenfield build, own, and operate contract for an electricity generation facility in Valladolid, Mexico. The project company, Compania de Generacion Valladolid (CGV), will generate power for CFE (to be distributed to consumers) under a 25-year power purchase agreement (PPA). The PPA will go into effect upon construction completion (expected in mid-2006). The Valladolid plant is located in Mexico’s Yucatan Peninsula. Establishing the additional generation capacity was deemed necessary by the government of Mexico in order to meet the rising electricity demand; the addition of Valladolid III was one of several plants scheduled for 2004 onwards in order to add 25,000 MW generation capacity between 2004 and 2012. The greenfield build, own , and operate contract was awarded by CFE in October 2003. A PPA was signed so that power would be generated to both industrial users and consumers (the distribution between these two groups was not disclosed). The winning consortium, CGV, comprises US-company Calpine (45 percent), Japanese-company Mitsui (27.5 percent), and Japanese-company Chubu (27.5 percent). The EPC contract was awarded to Mitsui (Japan). Financial closure was achieved in December 2004 for the total project financing of US$275 million. Japan Bank for International Cooperation (JBIC) is providing US$117 million and Japanese banks Mizuho, Sumitomo Mitsui, and Standard Chartered Bank, are each loaning US$26 million to the project company. The Valladolid III project follows on the Valladolid I and II projects, also in the Yucutan peninsula. The natural gas-fired plant has a capacity of 525 MW. Upon construction completion, the plan was expected to meet the electricity demands of more than 500,000 households on a 24-hours-a-day, seven-days-a-week basis. Operations commenced in June 2006. http://www.prnewswire.com/news-releases/calpine-completes-195-million-project-financing-for-525-mw-valladolid-iii-energy-center-in-mexico-75935287.html "SAN JOSE, Calif., Dec. 22 /PRNewswire-FirstCall/ -- Calpine Corporation (NYSE: CPN) announced today that its indirect subsidiary Compania de Generacion Valladolid, S. de R.L. de C.V. (CGV) completed a $195 million, non-recourse project financing for the Valladolid III Energy Center in Valladolid, Mexico. The financing facility will fund the construction of the 525-megawatt generation project that Calpine is developing with partners Mitsui & Co., Ltd. and Chubu Electric Power Co., Inc. Financing is being provided by the Japan Bank for International Cooperation (JBIC) and three commercial banks from their Tokyo-based offices. The banks include Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking Corporation and Standard Chartered Bank. Mizuho also acted as Lead Arranger for the transaction. The long-term financing facility will mature in October 2020. Pricing under the facility will be fixed for 60 percent of the principal and floating for the remaining 40 percent based on LIBOR plus a margin. Calpine has supplied two General Electric F-class combustion gas turbines in exchange for a 45-percent interest in CGV. Valladolid III is expected to begin operations in mid-2006 and sell its full output to the Comision Federal de Electricidad (CFE) under a 25-year power purchase agreement. "With its long-term power sales contract already in place, we are proud of achieving another milestone for our Valladolid project in Mexico," said Calpine Chief Financial Officer Bob Kelly. "We appreciate the support of JBIC and the commercial banks in completing this landmark financing for Calpine and we look forward to working with them on future transactions." Mitsui & Co., Ltd., headquartered in Tokyo, Japan, is one of the largest general trading companies in the world. Chubu Electric Power, located in Nagoya, Japan, is the third-largest electric utility in Japan with a generating capacity of nearly 33,000 megawatts. CFE, based in Mexico City, provides electric power service to most of Mexico. Calpine Corporation is a North American power company dedicated to providing electric power to wholesale and industrial customers from clean, efficient, natural gas-fired and geothermal power facilities. The company generates power at plants it owns or leases in 21 states in the United States, three provinces in Canada and in the United Kingdom. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit www.calpine.com. This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of Calpine Corporation ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to unscheduled outages of operating plants and other risks identified from time-to-time in the Company's reports and registration statements filed with the SEC, including the risk factors identified in its Annual Report on Form 10-K/A, amendment number 2, for the year ended December 31, 2003 and in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, which can also be found on the Company's website at www.calpine.com. All information set forth in this news release is as of today's date, and the Company undertakes no duty to update this information."