Calpine Sees Q4 Chap. 11 Emergence

Electricity producer, in bankruptcy since December 2005, files a reorganization plan that at least has a chance of returning something to common ho...
Stephen TaubJune 21, 2007

Calpine Corp. filed a reorganization plan designed to let it emerge from Chapter 11 bankruptcy during the fourth quarter.

The electricity producer estimated that its total enterprise value will be between $19.2 billion and $21.3 billion, with a midpoint of $20.3 billion, and estimated that distributable cash will be about $1.4 billion when it emerges from Chapter 11.

Allowed claims will range from $20.1 billion to $22.3 billion after completion of Calpine’s claims objection, reconciliation, and resolution process. Under this range, general unsecured creditors will receive between 91 percent and 100 percent of their allowed claims.

Under the plan, Calpine estimates, allowed claims of unsecured creditors will be paid in full. Common stockholders and holders of subordinated equity securities claims will receive somewhere between nothing and as much as $3.53 a share, according to the Associated Press.

It would be unusual for common holders to receive anything, since typically in bankruptcy reorganizations the positions of those shareholders are wiped out.

Calpine also said that a group of banks, including Goldman Sachs, Credit Suisse, Deutsche Bank, and Morgan Stanley, upped their exit financing to $8 billion in secured financing, or $3 billion more than the existing exit facility.

Calpine general counsel Gregory Doody said on a conference call that the company does not expect to cut staff or sell significant assets. “We don’t need to sell any assets and we think that the fleet is going to look largely the way it is now … the fleet that we are contemplating emerging with is largely what it is today,” he said.

Reuters also said that Doody confirmed that Calpine has had talks about a possible sale, but that he declined to comment on whether the talks were ongoing.

Creditors will now weigh in with their opinions on the plan by Calpine plan, which filed for bankruptcy in December 2005 after heavily loading up on debt to bankroll an aggressive expansion strategy.