Calpine

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For the town in California, see Calpine, California.
Calpine
Type Public
Traded as NYSECPN
Founders Peter Cartwright
Headquarters Calpine Center
Houston, Texas
, United States
Website www.calpine.com

Calpine Corporation is a Fortune 500 power company founded in 1984 in San Jose, California.

Calpine's headquarters were permanently moved from San Jose to Houston, Texas in 2009. The company's stock was traded on the New York Stock Exchange under the symbol CPN until it was delisted on December 5, 2005 due to low share price.[1] On 1/31/08, Calpine emerged from bankruptcy and again trades on the NYSE under the ticker symbol CPN.[2] The company is headquartered in the Calpine Center in Downtown Houston.[3]

History[edit]

In response to the 1973 oil crisis and the 1979 energy crisis, much legislation was passed that made domestic energy production an attractive enterprise. In 1984, Peter Cartwright and four of his co-workers, the Guy F. Atkinson Construction Company of South San Francisco, and the Electrowatt corporation struck an investment arrangement and Calpine was born with initial capital of US$1 million. It was essentially a Silicon Valley startup company. The name "Calpine" is derived from the company's California location and alpine, a reference to the Zürich home base of Electrowatt. Calpine is the world's largest provider of geothermal energy, and largest natural gas fueled power producer in North America.[4]

As of 2011, the directors of Calpine are J. Stuart Ryan, Frank Cassidy, Jack A. Fusco, Robert C. Hinckley, David C. Merritt, W. Benjamin Moreland, Robert A. Mosbacher, Jr., William E. Oberndorf, and Denise M. O'Leary.[5]

In 2004, the directors of Calpine Canada Energy Finance Ulc were Charles B. Clark Jr., Kenneth T. Derr, Jeffery E. Garten,[6] Gerald Greenwald, Susan Schwab, George J. Stathakis, Susan Wang, and John O. Wilson.[7]

  • 1984: provider of management services for independent energy companies
  • 1988: first power production
  • 1992: assets of US $21 billion
  • 1994: 141 MW capacity
  • 1996: largest IPO ever for an independent energy company
  • 1997: purchase of Montis Niger natural gas fields and pipelines in the Sacramento Valley
  • 1998: purchased 45 gas turbine power plants
  • 1999: purchased 18 gas turbine power plants
  • 1999: purchase of Houston's Sheridan Energy, a gas exploration and production company
  • 1999: acquired PG&E's plants at The Geysers, making Calpine the world's largest geothermal provider[8]
  • 2000: 3,355 MW capacity from 58 facilities
  • 2001: Established Canadian headquarters offices in Calgary, Alberta Canada.
  • 2001: purchase of first European facility in the United Kingdom
  • 2001: world's ninth largest electricity producer
  • 2001: stock price exceeds US$50.00 per share
  • 2001: the California electricity crisis
  • 2001: collapse of Enron Corporation
  • 2001: a US$17 billion four-year growth drive with about 50% financing scaled back in face of economic downturn
  • 2002: 13,000 MW capacity
  • 2003: Calgary Energy Centre in Calgary, Alberta Canada goes online.
  • 2004: 22,000 MW capacity; 89 energy centers in 21 states, Canada, and the UK
  • 2004: Investment bank Lehman Brothers begins shorting Calpine, with researcher Christine Daley lacking confidence in the Calpine Chief Financial Officer, the accounting, and the high debt. This information spreads to clients of Lehman. By the time Calpine goes bankrupt in 2005, Lehman will profit roughly $100,000,000 from the short.[9]
  • 2005: November: CEO Peter Cartwright and CFO Bob Kelly are fired.[1]
  • 2005: December 20: Calpine files bankruptcy, US$22 billion in debt. Calpine's aggressive leveraged expansion plan was unsupportable in the economic environment formed by the 2000-2001 California energy crisis and the collapse of Enron. Stock price dropped to less than US$0.30 per share. Delisted from NYSE.[1][1]
  • 2008: On 1/31/08, Calpine emerges from bankruptcy. Previous stock was exchanged for warrants. New Calpine stock began trading on the NYSE under the ticker symbol "CPN."[2]
  • 2009: Moved corporate headquarters from San Jose, California to Houston, Texas.
  • 2010: Acquired Conectiv Energy (generation) from Pepco Holdings[10][11]

Power plants[edit]

Finance[edit]

On March 29, 2002, Calpine Corp. announced to restate its 2001 earnings after learning certain emission reduction credits it purchased that year were not available. Earnings would be lowered by about $11.5 million after tax. On March 3, 2003, Calpine planned to record as financing transactions two sale-leaseback transactions previously accounted for as operating leases, resulting in the restatement of results for 2000, 2001 and 2002.[14] On Feb 24, 2005, Calpine said to restate its results for the third quarter and nine months ended Sept. 30, 2004, to correct the tax provision on discontinued operations.

Bankruptcy: Dec. 21 (Bloomberg) -- Calpine Corp., the biggest U.S. owner of natural-gas-fired power plants, filed for bankruptcy protection from creditors while it reorganizes, listing more than $22.5 billion in debt after fuel costs soared to a record.

The filing yesterday in U.S. Bankruptcy Court in New York followed the ouster of top executives after they lost a three-month fight with bondholders to use proceeds from asset sales to buy fuel. Calpine listed $26.6 billion in assets, the eighth-largest bankruptcy in U.S. history, according to Bloomberg data. Calpine got $2 billion in bankruptcy financing to keep its plants supplying customers in states from Maine to California.

Calpine, built by Peter Cartwright to compete for electricity sales with former local monopolies, suffered from the 2001 collapse of Enron Corp. and a glut of new plants that caused power prices to drop. The filing followed by less than a week the hiring of Chief Executive Officer Robert P. May, a turnaround expert who helped keep HealthSouth Corp. out of bankruptcy.

``I would expect them to be in and out of bankruptcy within two years, said Jon Kyle Cartwright, director of research for BOSC Inc. in Clearwater, Florida. Cartwright predicted that bondholders will recoup most of their money.

A strategy of extending maturities on its debt left Calpine with a complex system of secured and unsecured borrowings by the parent and its subsidiaries, said Dorothea Matthews, a debt analyst for CreditSights Inc. in New York.

`Could Be Messy'

``This could be messy, said Matthews, who doesn't own Calpine stock or bonds. ``There is debt, and sometimes multiple layers of debt, at subsidiaries. You have to figure out what the assets are worth, and then see if there is equity left than can back unsecured debt at the parent.

Calpine owes $4.32 billion to holders of secured debt and $5.33 billion to unsecured debt holders, according to Calpine's bankruptcy filing. Other debt is backed by power projects. The company's strategy to stay solvent crumbled after secured-debt holders stopped it from buying plant fuel with proceeds of sales of assets that backed their debt.

Calpine's debt includes $641.6 million in 6 percent notes due in 2014; $682.7 million in 8.5 percent notes due in 2011; and $411.1 million in 8.625 percent notes due in 2010, according to court papers. Wilmington Trust Co. is the largest secured creditor with at least $3.4 billion in claims.

Calpine's 8.5 percent bond maturing in May 2008 rose 1.25 cent on the dollar to 29 cents on the dollar in New York, according to Trace, the bond price reporting system of the NASD. The bond yields 80 percent, Trace data show. The bond was the second most actively traded among institutional investors on Trace with 39 transactions over $1 million.

Largest Unsecured Creditor

Wilmington Trust, trustee for a group of creditors, is also Calpine's largest unsecured creditor, with more than $4.6 billion in claims, according to court documents. The Bank of New York, another creditor trustee, has at least $659 million in claims. Deutsche Bank, which provided part of the bankruptcy financing, is owed $350 million, court papers show.

New York-based Amerada Hess Corp. is Calpine's biggest trade creditor, owed $8.4 million, according to filings. Others owed money for energy trades include Dynegy Inc. at $7.58 million, Calpine said in court papers.

Calpine's plants in 21 U.S. states and three Canadian provinces can generate 26,000 megawatts, enough to supply 22 million average U.S. homes, according to its bankruptcy filings.

``Our plan calls for power plants to remain available for operation to provide reliable supplies of electricity, May said in a statement. ``We intend to move through this restructuring process as quickly as possible to regain our financial health and to take the necessary steps to become a stronger and more competitive energy provider.

California Supplies

Calpine plans to ask U.S. Bankruptcy Judge Burton Lifland, who was assigned the case, for permission to void about a dozen contracts to help its reorganization, including one to supply 1,000 megawatts of power to the California Department of Water Resources, said company spokesman John Flumerfelt. That's enough power for 800,000 average U.S. homes.

California petitioned federal energy regulators Dec. 19 to compel Calpine to continue power deliveries to the state. Flumerfelt declined to specify the other contracts until formal requests are made with the bankruptcy court.

Calpine asked Lifkind for permission to pay up to $20 million to ``critical vendors, Chief Financial Officer Eric Pryor said in court papers. The company projects receipts of $200 million to $250 million in the next 30 days, Pryor said.

Cash Situation

As of Sept. 30, the company had $843 million in unrestricted cash, about $400 million of which was ``immediately available, Calpine said in court papers. Calpine needs access to $500 million of its $2 billion in bankruptcy financing by Feb. 8, it said in its filings.

Deutsche Bank and Credit Suisse First Boston arranged $2 billion in debtor-in-possession financing including $1 billion of revolving credit and a $1 billion term loan subject to court approval, Calpine said. Such arrangements give banks the right to first repayment in bankruptcy.

Calpine expects to have to pay out $190 million to $240 million during the same period, he said. Calpine's weekly payroll, including officers' salaries, is almost $22 million, the papers said. The company has 3,302 employees, the paper said.

Calpine also asked Lifland for permission to continue trading natural gas without interruption during the bankruptcy.

Delaware's Supreme Court on Dec. 16 upheld a lower-court ruling that Calpine must return $313 million to a bond collateral fund by Jan. 22. That order could be reviewed by Lifland.

Other Bankruptcies

Calpine joins Mirant Corp., NRG Energy Inc. and National Energy & Gas Transmission Inc. in seeking protection from creditors after an excess of plant construction pushed down U.S. electricity prices.

``Creditors should make a significant recovery, said Gary Hindes, who holds an undisclosed amount of Calpine bonds at Deltec Asset Management in New York. ``Everybody said there was no value for shareholders in the Mirant equity and we found at the end of the day that there was something there.

Atlanta-based power-producer Mirant filed for bankruptcy protection in July 2003 after failing to persuade creditors to refinance $4.9 billion in debt. Mirant is expected to exit bankruptcy in January under a court-approved reorganization plan. Unsecured creditors will get 96.25 percent of Mirant's new common stock, and pre-bankruptcy shareholders will get 3.75 percent, under the plan.

NRG exited bankruptcy in December 2003. The company's stock more than doubled since its bankruptcy ended.

New York Stock Exchange trading in Calpine stock ended Dec. 6, after the shares tumbled to 22 cents.

The case is Calpine Corporation, 05-60200, U.S. Bankruptcy Court, Southern District of New York.

Source:http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWyr7ZXcVZqo&refer=news_index

Coming out of Bankruptcy Calpine Corp., Texas' No. 3 power producer, officially emerged from bankruptcy protection Thursday afternoon and will likely see its stock resume regular trading early next week.

The company, which claims dual headquarters in Houston and San Jose, Calif., went into bankruptcy in December 2005, a victim of the glut of new power plant capacity it helped create and the skyrocketing cost of the natural gas that fuels the plants.

The company had about $22 billion in debt but has since cut it by about $7.2 billion, sold off close to a dozen power plants and cut the work force from about 3,300 workers to 2,200.

Calpine plants continued to run throughout the bankruptcy. So the exit from bankruptcy doesn't change its day-to-day operations significantly, CEO Bob May said Thursday.

But he believes the surge in support nationally to reduce greenhouse gas emissions is a good development for Calpine, given that all of its power plants are relatively new natural gas-fired plants or run on geothermal energy.

"We think we're in a unique position as one of the greenest power plant companies in the country," May said.


Houston is Calpine's largest office, with about 700 employees, including its energy trading operations.

The company plans to issue about 423 million shares of reorganized Calpine common stock, each with a value of $17.36. Much of that stock will go to pay unsecured creditors.

Holders of Calpine's common stock will receive warrants to purchase new Calpine common stock with an exercise price of $23.88 per share, which will most likely be more than the stock will be worth when it begins trading on the New York Stock Exchange next week.

Calpine's new shares have been trading on the New York Stock Exchange on a "when issued" basis, closing Thursday at $16.90.

Greg Doody, Calpine's general counsel, said he understands how upset common shareholders are with the outcome but that "we did every thing we could to increase the value of the estate."

The company also on Thursday named a new board of directors. Source: http://www.chron.com/business/energy/article/Calpine-Corp-puts-bankruptcy-behind-it-1771011.php

References[edit]

  1. ^ a b c d "Calpine, Form 8-K, Current Report, Filing Date Dec 5, 2005". secdatabase.com. Retrieved Mar 19, 2013. 
  2. ^ a b "Calpine, Form 8-K, Current Report, Filing Date Feb 1, 2008". secdatabase.com. Retrieved Mar 19, 2013. 
  3. ^ "Contact." Calpine. Retrieved on November 11, 2009.
  4. ^ http://www.calpine.com/media/Calpine_Corporate_Overview_Feb_2009.pdf
  5. ^ http://www.calpine.com/about/bdofdir.asp
  6. ^ Jeffery E. Garten
  7. ^ http://www.secinfo.com/dr6nd.117b.htm
  8. ^ "Calpine, Form 8-K, Current Report, Filing Date May 24, 1999". secdatabase.com. Retrieved Mar 19, 2013. 
  9. ^ A Colossal Failure of Common Sense, Lawrence G McDonald, Patrick Robinson, Crown (Random House), 2009, p99-p105, 154
  10. ^ "Calpine, Form 8-K, Current Report, Filing Date Apr 21, 2010". secdatabase.com. Retrieved Mar 19, 2013. 
  11. ^ http://phx.corporate-ir.net/phoenix.zhtml?c=103361&p=irol-newsArticle&ID=1443628&highlight=
  12. ^ [1]
  13. ^ [2]
  14. ^ "=Calpine Provides Update on Financial Audits; Company to Modify Treatment of Two Leases". 

External links[edit]