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CALPINE SINKS AFTER REPORT, DEBT CUT
CBS Market Watch ^ | 4 November 2005 | August Cole

Posted on 11/04/2005 3:11:39 PM PST by MeneMeneTekelUpharsin

SAN FRANCISCO (MarketWatch) - Calpine Corp. stock closed down more than 9% on Friday after the independent power producer posted its third-quarter results, which it subsequently had to correct, and Fitch Ratings cut the firm's credit rating. San Jose, Calif.-based Calpine turned in a third-quarter loss on Thursday that was wider than analysts expected. See full story. The company then later Thursday corrected its press release detailing its financial results to account for certain charges and items.

Among the changes, Calpine corrected its earnings before income taxes depreciation and amortization for the nine-month-period through Sept. 30 to $880.4 million, down from $1.12 billion as had been stated. The company also lowered its adjusted non-GAAP earnings to $379.6 million from $516.4 million for the third quarter. The company said it had incorrectly recorded certain asset-related charges as gains. Also weighing on the shares during Friday's session, Fitch Ratings cut Calpine's senior unsecured notes' credit rating to CCC- from CCC+. "The rating action reflects further deterioration in CPN's core operating EBITDA, slower than anticipated progress in achieving previously stated debt reduction targets, and the continued uncertainty surrounding ongoing bondholder litigation," wrote Fitch analysts.

Fitch has a negative outlook on Calpine's debt.

The credit markets' view of Calpine is important because of its debt, which it is working to whittle down. Calpine (CPN: Calpine Corporation News, chart, profile Last: 2.09-0.21-9.13%) 4:25pm 11/04/2005 FinancialsMore CPNCPN2.09, -0.21, -9.1%) shares closed the day down 21 cents to $2.09 on volume of over 29 million as the third-most active stock on the New York Stock Exchange. So far this year, Calpine stock is down almost 42%.


TOPICS: News/Current Events
KEYWORDS: calpine; cpn; debtcut; earnings; stocks; wallstreet
Calpine dropped a LOT today. Doesn't look good.
1 posted on 11/04/2005 3:11:40 PM PST by MeneMeneTekelUpharsin
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To: lafroste; snopercod; Dog Gone

FYI fellows.


2 posted on 11/04/2005 3:12:00 PM PST 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 haven't been following this closely the past couple of years, but it seems to me that Gray Davis pretty near bankrupted the Cali power companies and did nothing to solve the state's energy problems.

Since coming into office, Arnold also has done little or nothing to deal with environmental and regulatory constraints that are preventing any kind of long-term solution.

This was bound to come back, sooner or later.


3 posted on 11/04/2005 3:19:16 PM PST by Cicero (Marcus Tullius)
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To: Cicero
I realize that there is a sovereign immunity problem here - but it seems to me what CA and Davis did a few years back was to construct an environment in which no humanly possible management or direction of PG&E (or several other entities) could have avoided catastrophic losses. (Regulating the price to consumers but freeing the market for wholesale power ate through the capital of several major utilities.) So why not a shareholder suit against the state of California on a claim based in the takings clause?
4 posted on 11/04/2005 3:31:27 PM PST by Wally_Kalbacken
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To: Wally_Kalbacken

You point to one of the basic problems. They "deregulated" the wholesale market but kept the retail costs tightly regulated.

The other major problem is that even under the best conditions, California doesn't make enough power to satisfy its needs. So they suck in power from all the neighboring states. When it got really hot, they practically destroyed all their neighbors as well as themselves.

There's certainly something wrong when a state can behave like that and all the power producers, even from out of state, are required to bow down and kiss their toes and give them all the power they want.


5 posted on 11/04/2005 3:36:14 PM PST by Cicero (Marcus Tullius)
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To: Cicero

Gas prices haven't helped them. And the fact that they put so much debt on their assets was the killer.


6 posted on 11/04/2005 3:38:31 PM PST by Brilliant
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To: Wally_Kalbacken
California isn't going to get sued, and quite to the contrary, it's doing the suing.
7 posted on 11/04/2005 3:53:20 PM PST by Hoplite
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To: Hoplite
Sure - they are suing wholesale energy marketers (Mirant, etc.) - but I'm talking about the shareholders of the firms caught in the middle. Typically shareholders sue management alleging some act or oversight that was malfeasance or incompetence caused share prices to decline. In this instance - if memory serves me - the shareholders of PG&E took a 100% haircut because the firm was caught in the middle, and no management of any capability could have avoided bleeding the company dry in that situation.
8 posted on 11/04/2005 4:01:09 PM PST by Wally_Kalbacken
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To: Wally_Kalbacken
PG&E went bankrupt, but the shares never went below $6, if memory serves (now up around $35 since emerging from bankruptcy)

However, from those shareholders who did sell and took the 80% loss, or are looking to recoup lost dividends, the State has nothing to fear, as it can simply point the finger at the FERC, who failed to act regardless of evidence of wrongdoing on the part of the power providers and traders at the time.

9 posted on 11/04/2005 4:16:27 PM PST by Hoplite
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