Posted on 11/29/2005 9:18:02 AM PST by MeneMeneTekelUpharsin
Calpine Board Says CEO Cartwright, CFO Kelly Have Left the Company; Shares Sink
SAN JOSE, Calif. (AP) -- Calpine Corp. said Tuesday that its chairman and chief executive and its chief financial officer have left the company in moves that its board said will help the power provider address its financial challenges. Its shares sank 26 percent to below $1 in early trading.Calpine said founder Peter Cartwright, who was chairman, president and CEO, and Robert D. Kelly, its executive vice president and CFO, have each left the company.
"The board believes that these management changes are essential to better address Calpine's financial challenges and to provide a new direction for the company," the company said in a statement. The company appointed board member Kenneth T. Derr as chairman and acting chief executive and said it expects to announce a permanent replacement for Cartwright in the near future. Derr was the chief executive of Chevron Corp. from 1989 to 1999. Eric N. Prior, executive vice president and deputy chief financial officer, was selected as interim CFO.
Calpine shares tumbled 33 cents to 92 cents in early trading on the New York Stock Exchange. Calpine has been shedding assets in an attempt to improve its financial condition. The company lost about $242 million in 2004 and $684 million in the first nine months of 2005. Peter Cartwright founded Calpine in 1984 and had been chairman, president and CEO since 2001. Earlier this year, Cartwright pledged to shed $3 billion in debt this year and trim $200 million from Calpine's annual expenses.
What do they do and why are they losing so much money...
Calpine is a utility (electric power). Utilities only loose money when it's being stolen.
Calpine has had trouble because of the high price of natural gas. Also, bondholders don't want to let them use money from the sale of assets to buy natural gas. Bondholders want to take over the company for pennies on the dollar. It is one to watch.
Calpine had a major upheaval today. Something to go do some research about when you can.
Nah - a miscalculation as to future market conditions resulted in interest payments larger than the company's gross income.
Kinda like if you buy a house and then can't rent it for enough to cover the costs of the mortgage.
Hmmm....what happens when ALL the officers and board members resign?
They borrowed a bunch of money and built a bunch of electric power plants fueled by natural gas.
They have long-term contracts to supply power to industrial consumers. Natural gas went from $2 to $11 per million Btu and their contracts don't fully pass through escalating fuel costs.
So, they're losing money hand over fist, and now their bonds are coming due. The bondholders are highly concerned about getting paid off.
Unlike recent corporate scandals, this situation really is primarily due to a failed business model.
Doesn't look good.
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