Calpine - interessanter Alternativ-Versorger
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Deine Postings haben meine Aufmerksamkeit auf diese Aktie gelenkt und ich habe den Absturz mitverfolgt um dann bei 1.65 einzusteigen.
Wie siehst Du den weiteren Verlauf?
Die endgültigen Zahlen kommen am 5. Mai; die Ergebnisse vom letzten Freitag waren vorläufig. Dann wird auch entschieden, was mit der Wandelanleihe (Fälligkeit August 05) geschieht. Die Zahlen vom Freitag lagen unter den Analystenerwartungen. Analysten hatten mit einem Quartalsverlust von 0,28 Dollar gerechnet, tatsächlich lag er bei 0,38 Dollar. Dies könnte den Deckel auf dem Kurs halten. Entscheidend ist, wie sich in nächster Zeit der Preis für Natural Gas entwickelt, der sich synchron zum Ölpreis bewegt.
Aber das war schon wirklich eine gute Leistung und mit dem Nachkauf sehr konsequent verfolgt.
Ich wünsche dir, dass du den Absprung nicht versäumst, oder bist du schon raus?
Ich habe gestern alle Calpine für 2,35 Dollar verkauft - bis auf die, die meinem Gewinn entsprachen. Die lass ich jetzt einfach stehen (ca. 1,3 % meines Portfolios) - und spekuliere damit sozusagen auf Kosten des Hauses.
Falls Calpine noch einmal auf ca. 1,90 fällt, würde ich mehr dazukaufen.
Ich hab mich noch nicht entschieden ob ich die Zahlen abwarten soll oder nicht.
By Stephanie I. Cohen, MarketWatch
Last Update: 11:58 AM ET May 5, 2005
WASHINGTON (MarketWatch) -- Calpine Corp. on Thursday posted a wider first quarter loss citing higher operating and interest expenses associated with new plants coming on line.
The merchant power generator reported a first quarter net loss of $168.7 million, or 38 cents a share, compared with a loss of $71.2 million, or 17 cents a share, in the same quarter a year ago.
Calpine just last week braced investors for the news in an updated financial outlook. The update failed to prevent a 5% fall in its shares at the open but they bounced back by midday to $2.23, down 5 cents or 2.2%.
"Traditionally, we experience seasonably low revenue ... during the first quarter," said Pete Cartwright, Calpine chief executive officer, in a statement.
Calpine (CPN: news, chart, profile) reported a 9% increase in revenue in the first quarter to $2.21 billion, up from $2.03 billion a year earlier.
San Jose, California power provider operates a fleet of gas-fired and geothermal power plants in 21 states, Canada, and Britain.
One of the many merchant power businesses struggling in recent years amid an oversupplied market and high fuel costs, Calpine has been dogged by recent rumors of an impending bankruptcy.
During the three months ended March 31, 2005, Calpine's financial results were hurt by a $100.5 million increase in interest expenses, compared to the same period in 2004, the company said.
Calpine, one of many merchant power businesses struggling in recent years amid an oversupplied market and high fuel costs, has seen its shares hit hard in recent.
Persistent short-selling prompted the company to take the unusual step of issuing a statement to knock down what it called "reckless and unfounded rumors" that it was about to file for bankruptcy.
At the same time, Calpine requested the New York Stock Exchange open an investigation into recent trading of its stock.
By Stephen D. Simpson, CFA
May 5, 2005
Ever try running through mud or wet sand? Not really rewarding or fun, is it? Calpine (NYSE: CPN) managers might be able to relate to that analogy right about now. Debt and market rumors of bankruptcy are overshadowing the progress being made at the power company.
Calpine's first-quarter revenue grew 9%, helped along by a significant year-over-year improvement in the company's spark spread. Operating results were also better, as gross profit and operating margin both improved on a year-over-year basis. In fact, the company posted a 1.1% jump in operating margin and a 64% improvement in operating income.
Now for the bad news. Interest expense rose dramatically in the quarter -- up 40% to nearly $350 million. With that sharp uptick in debt expense, the company posted a net loss of nearly $169 million for the quarter -- more than double the year-ago loss. While the company posted lower cash consumption from operating activities, earnings before interest, taxes, amortization, and depreciation were also down on a year-over-year basis.
What Calpine could really use right about now is a "debt fairy." If there were some way of magically wiping away a big chunk of the $18 billion in debt, Calpine would be a completely different company. Alas, the debt fairy is just as real as the tooth fairy, so there will be no easy way out.
Although Calpine managers made no promises for the future, it sounds as if they are at least willing to consider additional asset sales if the prices are right. That makes a lot of sense. Calpine is running at less than half of capacity on a companywide basis. If there are any redundant or non-strategic assets that can be converted to cash for debt repayment, that seems like a slam dunk to me.
In the meantime, owning Calpine shares these days will probably continue to be a lot like trying to drive on ice -- nail-biting, tough, and replete with the feeling that forces beyond your control are deciding your fate. While there are signs of improvement in the broader power market, Calpine has a long row to hoe to get its balance sheet in order and put the company in a position to report net profits to its owners.
At this point, Calpine looks like what I've always called a "binary stock" -- either it's going to recover and be all right, or it's heading to zero. Calpine clearly has assets with value, management is making progress on operating efficiency, and the company isn't in imminent danger of collapse. But that debt load is huge, and the market for independent power generation can be extremely volatile.
Investors with a nose for deep value and a very high tolerance for risk might want to take a sniff, but this is absolutely not a stock that belongs in everyone's portfolio today.
Ich bin bei Calpine bislang nicht wieder eingestiegen und beobachte die Aktie weiter. Sie bewegt sich zur Zeit zwischen 1,75 und 2 Dollar. Calpine erwägt, zum Schuldenabbau firmeneigene Gasfelder zu verkaufen, was der Aktie einen Schub geben könnte.
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Moody's downgrades Calpine debt
By Stephanie I. Cohen, MarketWatch
Last Update: 5:28 PM ET May 12, 2005
WASHINGTON (MarketWatch) - Moody's Investors Service on Thursday lowered the ratings on $12 billion of Calpine Corp's debt deeper into junk status, citing the merchant power company's weak financial outlook and potential for recovery. Moody's downgraded the rating of Calpine Corp.'s (CPN: news, chart, profile) senior implied debt to B3 from B2 and subsidiary Calpine Generating Co.'s credit facilities to B2 from B1.
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Calpine Considers Sale Of US Natural Gas Assets >CPN
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05-17-05 09:31 AM EST
SAN JOSE (Dow Jones)--Calpine Corp. (CPN) said it is evaluating "strategic alternatives" for its U.S. natural gas assets, including a potential sale.
In a press release Tuesday, the power company said its natural gas assets are primarily located in the Sacramento Basin of California, South Texas and the Gulf of Mexico. In addition, the company is active in Colorado, New Mexico and Utah.
As of Dec. 31, Calpine had 389 billion cubic feet equivalent of proved gas reserves. Calpine's natural-gas land interests currently include 386,674 net developed and undeveloped acres and the company's assets currently produce about 90 million cubic feet equivalent per day from 607 net wells.
"Net proceeds from any sale of the natural gas assets would be used in accordance with Calpine's existing bond indentures," the company said.
In 2004, Calpine had revenue of $9.23 billion.
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Forbes.com
Junkyard Steals
John Dobosz, May 23, 2005, 4:45 PM ET
When newsmagazines start running covers proclaiming the end of the world, it's time to go long the planet. Of course, this is a contrarian investor's philosophy. When sentiment hits extremes, a price move in the opposite direction soon follows.
BusinessWeek covers have often been great contrarian indicators. On Aug. 13, 1979, its cover story, "The Death of Equities," all but proclaimed the imminent birth of a new bull market. On the cover of BW's May 9, 2005, issue: "Why GM's Plan Won't Work." This bold feature hit newsstands just before billionaire investor Kirk Kerkorian made a tender offer for General Motors and subsequently pushed its stock up more than 20%.
On May 5, Standard and Poor's lowered its credit ratings on General Motors and Ford Motor (nyse: F - news - people ) to junk status. The two companies have a combined $450 billion-plus sloshing around in world debt markets. The downgrade effectively added a mountain of new paper to the junk market, where existing hard-luck corporate stories will have to compete for capital against two of America's biggest corporations that soon may have trouble paying their bills on time, if they don't get big pension concessions out of their legions of current and retired unionized workers.
Confident that GM and Ford will be able to strike deals and get out of the junkyard, bond guru Richard Lehmann, editor of the Forbes/Lehmann Income Securities Investor, has been buying up General Motors and Ford debt since the downgrade, including the General Motors 7.25% note trust-preferred issue, which currently yields nearly 10%.
"The junk bond market has been overvalued for more than a year," says Lehmann, who points out that conditions in the high-yield market are not likely to improve soon, due in part to the big splash made by the Ford and GM plunge into the relatively small pool of high-yield debt.
Another ominous wave to hit high-yield debt is going to be a pickup in default rates, which Lehmann thinks will happen before the end of the year. Some of the notably weaker members of the debtor herd, such as Delta Air Lines (nyse: DAL - news - people ) and Calpine (nyse: CPN - news - people ), may fall prey early on in the cycle.
Shares surge 27% on accelerated plan to shed costs
By Jim Jelter, MarketWatch
Last Update: 11:14 AM ET May 25, 2005
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SAN FRANCISCO (MarketWatch) - Merchant power company Calpine Corp. unveiled Wednesday an ambitious plan to knock $3 billion from its heavy debt load by the end of the year, one year sooner than earlier targeted.
The plan, which aims to lower the company's annual interest payments by $275 million and trim $200 million from its annual operating costs, also includes selling up to eight power plants and shuttering others that are not turning a profit.
Shares of the San Jose, Calif.-based electricity provider surged 53 cents, or 27%, on the news to $2.51.
Calpine (CPN: news, chart, profile) , struggling with poor cash flow and dogged by recent rumors that it was headed for bankruptcy, saw its share price tumble to a low of $1.32 in late April.
"Calpine has set an aggressive and timely program to strengthen our financial and competitive position," Calpine Chairman, President and CEO Peter Cartwright said in a statement.
"To operate effectively in a business environment that has changed dramatically over the last few years, we are reviewing all options to provide near-term results, while continuing to focus on long-term value. We have already recognized several attractive opportunities, which we expect will improve our operating cash flow," he added.
Those opportunities include the sale of its 1,200 megawatt Saltend Energy Centre in Britain. The plant was put on the block some time ago and Calpine said it is nearly finished reviewing bids. Proceeds from the sale will be used to redeem about $620 million of preferred stock issued in connection with the project.
The company also said it is mulling "strategic alternatives" for its domestic oil and natural gas assets, including selling some or all of them to raise cash.
Another step it is taking is upgrading its gas-fired power plant fleet to cut down on fuel costs, especially during what is called off-peak hours, or those times during the day when electricity demand tapers off.
Jim Jelter is Industrials Editor for MarketWatch in San Francisco.
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05-25-05 03:56 PM EST
SAN FRANCISCO (Dow Jones)--Calpine Corp. (CPN) is in negotiations to sell eight of its power plants in North America, the company's chairman and chief executive, Peter Cartwright, said Wednesday.
At its annual shareholder meeting, Calpine executives expanded a bit on their announced plan to sell assets, reduce debt by $3 billion and cut operating costs in an effort to return to profitability.
The San Jose, Calif. company lost money for the first time in 25 years last year, as it was wrapping up construction of a large fleet of new generating stations amid a years-long slump in U.S. wholesale electricity margins.
Cartwright added that none of the eight plants now in sales negotiations are part of its goal to reduce debt by $3 billion this year.
"If we finalize the sale of any of the eight plants in 2005, we will further reduce our debt this year," he said.
Calpine had previously set a goal of buying back $3 billion in debt by the end of 2006, but it accelerated the goal by a year in a financial restructuring plan announced Wednesday.
Calpine's press release earlier Wednesday had said only that, "The company is also evaluating the sale of up to eight other power plants."
At the shareholder meeting, however, Cartwright declined to say which plants are for sale or even which region of the country they are in, except that they're not in California, Texas or the Southeast.
The sale of the eight plants is in addition to the sale of the Saltend generating station in the U.K. The company has narrowed down the bidders for Saltend to two finalists, Chief Financial Officer Bob Kelly said Wednesday.
"We slipped in our timeline over the past week or two as the bids came in a lot more complicated than we expected," Kelly said. "I feel pretty good that it will be sold."
The Saltend sale is seen as a key source of cash, but a bondholder in the Canadian subsidiary of Calpine is suing to prevent the Saltend proceeds from being transferred to the parent company. Calpine has said it will probably prevail in its defense against that suit, but the whole dispute sent its bonds and stock prices tumbling a month ago. The company also saw its credit ratings reduced deeper into junk-bond territory.
Calpine's stock price rebounded Wednesday, on the announcement of its financial restructuring plan, to where it was before the Saltend protest. At about 3:45 p.m. EDT, Calpine stock was trading at $2.60 a share, up 62 cents or 31% on the day.
The company is also looking at selling its remaining reserves of natural gas and oil.
However, when asked by one shareholder how much revenue will be reduced by the various asset sales, Cartwright said he didn't know.
Kelly said that any such sales boost bottom line income, because proceeds are used to buy back bonds often trading in the secondary market at a significant discount to face value.
A $3-billion reduction in debt would result in $275 million in interest cost savings annually, Cartwright said in the shareholder meeting. Calpine's current debt is about $18 billion and its annual interest costs are about $1.5 billion. The company will further reduce debt in 2006 and 2007, Cartwright said.
Calpine could potentially repurchase some $400 million in outstanding convertible bonds called "High Tides" with cash this year, Kelly said. The company has already repurchased more than $100 million of the issue, which matures in July. The bonds could be refinanced, paid off with stock, or left in place with a higher coupon. Calpine's preference is to replace them with some other equity-linked securities that would mature in 10 years, thus putting off potential dilution of Calpine equity.
One shareholder on Wednesday sharply criticized Kelly's "absolute disdain" for the credit rating agencies - Standard & Poor's and Moody's - and for debt holders.
"Mr. Kelly brags about buying back debt at 60 cents on the dollar. This isn't a long-term business plan. He should be embarrassed that Calpine debt is trading at that level," that shareholder said.
The higher interest rates that Calpine faces due to its lower credit rating, the investor said, will more than negate all the improvements the company can make operating its plants more efficiently.
Cartwright said the company hopes to see its bonds return to trading at par eventually, as it reduces its total debt.
In addition to cutting interest costs, the plan calls for reducing operating costs by about $200 million a year. The operating costs cuts could double to $ 400 million a year over the next few years, Cartwright told shareholders.
Shareholders re-elected three board members - Cartwright, Susan C. Schwab and Susan Wang - and voted in favor of changes to the company's bylaws proposed by the board. They also approved the hiring of PriceWaterhouseCoopers as Calpine's new auditor.
Im Moment bin ich wieder draussen und schaue zu nachdem ich gestern bei 2.5 verkauft habe.
Ich denke der Kurs kommt bald wieder zurück. Nüchtern betrachtet hat Cartwright zwar die richtigen Absichten verkündet aber diese müssen sich zuerst ansatzweise realisieren.
Saltend plant bought by International Power, Mitsui
By Kabir Chibber, MarketWatch
Last Update: 3:40 AM ET May 31, 2005
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LONDON (MarketWatch) -- Debt-addled power firm Calpine Corp. has agreed to sell a power plant in England to the U.K.'s International Power PLC and Japan's Mitsui & Co. Ltd for 500 million pounds ($908 million).
Calpine (CPN: news, chart, profile) is selling its modern Saltend 1,200-megawatt combined cycle cogeneration power plant in Hull, England -- its only U.K. unit -- to accelerate the reduction of its heavy $18 billion debt load.
The total equity investment of 225 million pounds for the Saltend plant will be funded 70% by International Power (IPR: news, chart, profile) (UK:IPR: news, chart, profile) and 30% by Mitsui (JP:8031: news, chart, profile) , with the contribution from International Power at 158 million pounds. The remaining consideration will be funded by non-recourse debt of 275 million pounds.
International Power said the deal will lift earnings in its first full year of ownership and boost cash.
"This asset will be integrated into our portfolio in the U.K. market, where we have a blend of efficient and flexible gas, coal and hydro generation," said CEO Philip Cox. The deal is expected to be completed by the end of July.
Der Pre-Market spielt verrückt und es wurden bereits 3.50 bezahlt.
Ich spiele mit dem Gedanken heute nochmals einzusteigen.
Ich warte deshalb lieber wieder auf einen Rücksetzer in Regionen um 2,25 Dollar, falls das noch einmal kommt. Fundamental ist der Verkauf der Saltend-Anlage eine sehr gute Nachricht. Dann muss Calpine nicht mehr soviele High Tides bzw. Convertibles (Wandelanleihen) zum Bedienen der Schulden mehr rausgeben, die potenziell den Kurs verwässern können.
Das Kredit-Rating-Downgrade auf B mit negativem Ausblick wurde jedoch bislang nicht wieder aufgehoben. Daher halte ich einen Rücksetzer auf 2,25 Dollar für realistisch.
Morgen kommt ein "10-Q filing", das vermutlich enttäuschen wird. Calpine hat im letzten Quartal trotz Rekordhitze in Kalifornien nur 40 % Kapazitätsauslastung gehabt und die Erwartungen deutlich verfehlt (Ergebnis: - 51 Cents pro Aktie statt - 22 Cents Konsenserwartung).
Die Verkäufe von Anlagen (Saltend-Gaskraftwerk in England) und der firmeneigenen Gasfelder haben nur scheinbar die Verschuldungs-Misere verbessert. Denn die Saltend-Anlage diente als Kollateral für Anleihen, die durch den Verkauf nun fällig werden. Auch die Gasfelder dienten als Kollateral zur Kreditsicherung, so dass auch deren Verkauf kaum verfügbares Geld bringt. Die hohe Verschuldung in Verbindung mit unter den Erwartungen liegenden Stromverkäufen wird zunehmend prekär. Calpine kann mit den Einnahmen weder kostendeckend arbeiten noch die Schuldzinsen bezahlen - es wird also vorerst bei Verlusten bleiben. Bis sich da Besserung abzeichnet, sollte man Calpine sicherheitshalber meiden.
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Calpine's Sales Mask Debt Woes
By William Gabrielski
Street.com, 8. August 2005
In a recent Morningstar report on power producer Calpine (CPN:NYSE) , the research firm said it would consider buying shares if the stock fell to 10 cents a share. As far-fetched as this may seem, given the stock's current quote of $3.35, Morningstar may be more perceptive than the nine Street analysts who currently rate the stock a hold or buy.
Calpine is in the business of providing natural gas-fired power to utilities. These utilities, such as PG&E (PCG:NYSE) , demand more power during peak periods, such as in California right now where high temperatures have led to a surge in air conditioner usage. So the second quarter should have been a decent period for Calpine.
Yet the company lost 51 cents a share in its second quarter, missing Wall Street estimates by 22 cents a share. Calpine, with all of its mass and scale and perfect geographical positioning in the warmest portion of the country at the right time of the year, only managed to operate at 40% of its capacity in the quarter. This yielded $215.1 million in EBITDA, which is not enough to cover its $333.7 million in interest expense for the quarter, let alone the $50 million to $100 million it usually spends just to keep its plants up and running. (Note that the company, which has a history of issuing guidance that it subsequently misses, said it expected to deliver $1.6 billion to $1.7 billion in EBITDA in 2005. At this pace, it will not come close to this forecast.)
In addition, Calpine stated that July utilization had only risen to 51%. Industry watchers, however, would prefer, or even expect, a company of Calpine's stature to have closer to a minimum 60% of its capacity right now. Part of the problem with Calpine's business results is that plant breakdowns held back power generation in the quarter. This raises the interesting question of why the company did not fix its plants. Perhaps it is because Calpine doesn't have the cash to spend on repairs.
In the company's press release that accompanies its second- quarter earnings report, Calpine reported having $636 million in cash and $993.9 million in restricted cash. Of this reported restricted cash, some $400 million has already been spent by the company to repurchase some preferred securities.
This, in and of itself, is quite paltry relative to the company's $17.4 billion debt load and more than $1.5 billion in annual interest payments. But what's more concerning is that the $636 million cash figure may not be representative of the amount of cash Calpine can actually spend. And when the company's 10-Q is issued Tuesday, some of these concerns may come to light.
First, about $315 million of this cash is inaccessible because it is sitting on the balance sheet of its subsidiaries, as required by certain debt indentures that require a certain amount of collateral. In addition, the company has about $186 million in debt due on Aug. 15.
So of the $636 million in cash on hand, roughly $200 million may be free to fund operations, capital expenditures and further debt and interest payments in the third quarter. This type of liquidity is unsustainable for a public company with large capital expenditures. Calpine will struggle to shell out cash to make plant repairs or buy natural gas to generate power.
To be fair, the company has closed two large asset sales since the end of the June quarter that it said significantly improved its cash position. During the first week of July, the company closed the sales of its natural gas reserves in Canada, the Gulf Coast and California for net proceeds of $835 million. And on July 28, Calpine sold its Saltend facility for $848 million.
If you add this $1.7 billion to the $100 million to $200 million or so in cash the company had to fund its operations at the end of the second quarter, plus Street estimates for about $350 million in EBITDA this quarter and $122 million in proceeds from two other asset sales, you could argue the company is in a decent financial position to get through the end of the year, at least.
Unfortunately, when a company in Calpine's financial situation sells assets that have served as collateral for already existing debt obligations, new debt obligations are triggered because the bonds are no longer secured by the asset, as required in the debt indentures.
Take the sale of its natural gas plant. Of the $835 million raised with the natural gas sale, about $696 million is in escrow and needs to be used to buy back the debt that was secured by the asset. That's because only $139 million of the debt being used to secure the asset has been tendered, meaning the company is still on the hook for the $696 million that is sitting in escrow. In other words, this asset sale had a negligible impact on the company's ability to pay its bills.
And Calpine's other cash obligations -- capital expenditures on maintenance; interest expense; money owed to buy back $620 million in outstanding preferred stock already spent this quarter; the $400 million the company has used to buy back the preferred debt mentioned above; working capital required to secure natural gas to fire its plants -- leave the company with just about nothing at the end of the quarter.
Additionally, there is unconfirmed speculation among a number of hedge funds and analysts that Calpine's sales of its natural gas business back in early July has limited the company's ability to secure natural gas, its main feedstock for power generation. Calpine has a junk debt rating with credit agencies, so securing the financing to buy natural gas can prove quite costly. Without this feedstock for power, the company's total output may be held back during the peak months when demand, and profits, should be soaring.
The bottom line is that Calpine, at some point, is likely to run out of cash and assets to sell. Unlike Williams Companies (WMB:NYSE) or El Paso (EP:NYSE) , which both climbed out from under massive piles of debt over the past few years and are now operating sustainable business models, Calpine's asset sales are going to pay the interest expense on the financial obligations created by the asset sales themselves, despite the immediate appearance that the company is paying down debt.
When we called the company to ask the CFO for help understanding the financials, we were told he was on vacation and unavailable for comment. Its public relations department was able to confirm the majority of our numbers without dispute, but would not comment on our analysis.
Ähnlich problematisch ist die Lage bei der hochverschuldeten Delta Airlines (Aktie heute: 1,17 USD), die durch den hohen Ölpreises aller Wahrscheinlichkeit in den Bankrott (Chapter 11) getrieben wird.
Alles in allem ist Calpine nun ein Pleite-Kandidat. Die hohen Gas-Preise haben den von mir im Mai erwarteten Turnaround zunichte gemacht. Der Sommer in Kalifornien war zwar heiß, hat aber weniger Umsatz gebracht als erwartet (siehe Posting 72). Zudem stiegen die Gas-Preise noch stärker als die Umsätze, was zur Liquiditätskrise geführt hat. Bis sich fundamental etwas ändert, werde ich zu CPN nichts mehr posten - und die Aktie auch nicht mehr kaufen.
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Calpine's use of proceeds questioned
By Lisa Sanders, MarketWatch
Last Update: 12:26 PM ET Sept. 21, 2005
NEW YORK (MarketWatch) - The Bank of New York has questioned Calpine's decision to reinvest proceeds from asset sales in July, the power generator confirmed Wednesday.
Shares in Calpine sank 8.6%, or 26 cents, to $2.77 on much heavier-than-normal volume.
Katherine Potter, a spokesperson for Calpine, said via e-mail that the Bank of New York, which serves as the collateral trustee for the company's secured debt holders, has referred the company to a law firm, which claims to represents holders of Calpine's first lien notes. Calpine offered the proceeds to the first lien holders in July and $139 million of the notes were tendered to the company in response, Potter said. "As previously reported in our 10-Q and as permitted in our indentures, Calpine is permitted to use the proceeds from the sale of its oil and gas assets to acquire new natural gas and/or geothermal energy assets," she said. "A portion of those proceeds has been used to reinvest in new natural gas assets."
The Bank of New York stressed that it serves only an administrative role. "We have no comment on the discussions between the interested parties," a spokesman said. In May, the company announced a plan to cut $3 billion of debt by selling assets and using the money to pay down bonds.
Calpine, which carries junk-bond ratings, has been fighting to remain afloat since the collapse of its share price following the Enron-related meltdown of the merchant energy group. Most recently, it formed a energy marketing and trading business with Bear Stearns in a deal designed to reduce Calpine's collateral requirements and allow it to buy and sell natural gas and power, on a short-term basis, as an A-rated entity.
Board Members Bolt From Calpine
By William Gabrielski (TheStreet.com)
9/21/2005 11:36
Calpine (CPN: NYSE) shares are under more pressure this morning, following Tuesday night's announcement that two board members -- Jeffrey Garten and John Wilson -- are leaving the company.
Garten is a well-respected businessman who served as undersecretary of commerce for former President Bill Clinton. Garten is the current dean of the Yale School of Management and has a strong Wall Street bloodline, including stints at The Blackstone Group and Shearson Lehman. Wilson joined Calpine's board in 1997, shortly after the company's IPO, and plans to continue to serve as a faculty member of the University of California at Berkeley.
The company issued a press release saying the board had named William J. Keese, former chairman of the California Energy Commission, and Walter L. Revell, chairman and chief executive officer of Revell Investments International, to replace Garten and Wilson on the board.
The speculation among debt analysts and traders I spoke with is that the departure of Garten, which was effective as of Sept. 14, could be a sign that Calpine's walls are caving in and that Garten does not want to be associated with a company that could be on the verge of insolvency. This seems like a fair assessment based on my research, and I'd expect Calpine's current financial situation to gain more attention in light of this. I have contacted the company regarding these departures and am awaiting comment.
In other news, Calpine's planned $400 million preferred offering is not receiving a positive reaction on the Street. The deal size has been cut to $300 million , according to a report from DebtWire.com. And Calpine now plans to wait until February to buy back the $150 million preferred it issued in August, raising the question as to whether it will be able to get the $300 million deal done at all. But even if the deal does get done, the amount of time that has passed since the company announced its plans to issue these preferred securities leads me to believe the terms will not be favorable to Calpine.
By delaying the repayment of the $150 million, and cutting the deal size of the recently proposed preferred offering from $400 million to $300 million, Calpine's liquidity situation could be in an even worse position than I originally believed.
Finally, in response to Tuesday's column, Calpine sent me an email saying it could use the proceeds from its natural gas asset sale to acquire natural gas. The bondholders continue to disagree. But no matter who turns out to be right, the fact that Calpine's access to the funds it has with Bank of New York has been cut off is a negative for the company's ability to fund operations and secure natural gas.