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CALPINE STEPS UP EFFORTS TO CUT DEBT
CBS Market Watch ^ | 25 May 2005 | Jim Jelter

Posted on 05/25/2005 10:48:39 AM PDT by MeneMeneTekelUpharsin

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.


TOPICS: News/Current Events
KEYWORDS: calpine; calpowercrisis; debt; ipp
Jumped up pretty sharply today. Brilliant moves by Calpine management lately. Bought bonds when they were depressed, selling certain assets... Maybe they'll make it.


1 posted on 05/25/2005 10:48:39 AM PDT by MeneMeneTekelUpharsin
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To: MeneMeneTekelUpharsin

Thanks for the post. I bought shares of CPN when it was at $10.00 at the recomendation of a rather smart investor.

I wonder if it will ever go back to where I bought.


2 posted on 05/25/2005 10:52:18 AM PDT by Moleman
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To: Moleman

You might want to read and research. It looked pretty bad for a while, but that may have been a ploy to let the bonds go down --- which CPN bought back cheaply, thus reducing debt. And, they're about to reduce debt quite a bit more. It's looking a LOT better than it did before. Don't lose heart.


3 posted on 05/25/2005 10:54:26 AM PDT by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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To: Moleman

I managed to get some at 1.39 for my uncle and 1.46 for my dad. So, at least they are doing quite well right now.


4 posted on 05/25/2005 10:54:56 AM PDT by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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To: MeneMeneTekelUpharsin

I'm in at around $3.80, go CPN, I was recently told it held the honor of having the most short sellers in the market. Guess that's a buy signal, LOL.


5 posted on 05/25/2005 11:09:46 AM PDT by Mister Baredog ((Minuteman at heart, couch potato in reality))
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To: Moleman

Just read an article in the WSJ - an interesting thing was that they want to use peroleum coke and put converter plants on their Natural Gas power generation sites to get around the cost of Natural Gas.


6 posted on 05/25/2005 11:48:26 AM PDT by glorgau
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To: Mister Baredog

I'm sure it will do well. Don't sell too soon...and miss out. It is rocketing up today. Just started surging again as I type. Big boys are buying -- big lots.


7 posted on 05/25/2005 12:18:01 PM PDT by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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To: MeneMeneTekelUpharsin
I'm sure it will do well. Don't sell too soon...and miss out. It is rocketing up today. Just started surging again as I type. Big boys are buying -- big lots.

Thank's but my problem is I usually hold on too long, however I agree with you regarding CPN. Thanks for posting it.

8 posted on 05/25/2005 1:14:21 PM PDT by Mister Baredog ((Minuteman at heart, couch potato in reality))
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