Calpine files for bankruptcy, secures $2-bil lifeline

New York (Platts)--21Dec2005

Merchant power generator Calpine Corp filed for bankruptcy protection
shortly before midnight on Tuesday in the US Bankruptcy Court for the Southern
District of New York.

     Several of Calpine's subsidiaries, including Calpine Generating, were
included in the filing, as well as direct and indirect subsidiaries in Canada.

     The filing was widely expected by analysts and investors in the wake of
events of the past week. The San Jose, California-based company on Nov 22 lost
a lawsuit against holders of its first and second lien notes who successfully
argued in the Court of Chancery in Delaware that Calpine improperly spent the
proceeds of a $1-bil sale of its natural gas assets.

     Seven days later, on Nov 29, Calpine's board fired CEO and company
founder Peter Cartwright and CFO Robert Kelly. On Dec 16 Calpine lost its
appeal to overturn the Chancery Court decision.

     As part of its Chapter 11 bankruptcy filing, Calpine secured a $2-bil
debtor-in-possession financing from Deutsche Bank and Credit Suisse First
Boston, joint lead arrangers and joint bookrunners. The financing includes a
$1-bil revolving credit facility and a $1-bil term loan.

     A Calpine spokeswoman said that upon Court approval, the financing would
be used to fund operating expenses, including employee and supplier
obligations. Robert May, Calpine's newly appointed CEO, said he intends to
move through the restructuring process "as quickly as possible." 

     The deadline for Calpine filing its restructuring plan with the court is
April 19, 2006, according to the court documents. 

     May added that Calpine would "continue to provide reliable power supplies
to the markets in which we operate." He also said the company would pursue a
"new business model," but the company's spokeswoman was not able to elaborate.

     Calpine has, however, asked the court to reject some of its contracts in
which the prices paid to Calpine were below market value. The spokeswoman did
not know how many contracts that would include or their value.

     She did say, however, that Calpine is "moving forward" with its CalBear
joint venture with Bear Stearns under which the Wall Street investment firm
will put up about $350-mil to back gas and electricity trades conducted by
Calpine's trading arm, Calpine Merchant Services. She could not say when those
transactions would begin.

		--Peter Maloney, peter_maloney@platts.com

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