Calpine’s Losses Triple

By Published On: July 7, 2006

While under bankruptcy protection, Calpine has posted spiraling losses. The company admitted that it may not be able to stay afloat. “There is substantial doubt about our ability to continue as a going concern,” said Calpine in a July 3 report to the Securities and Exchange Commission. “We are working to design and implement strategies to ensure that we maintain adequate liquidity and will be able to continue as a going concern.” The company reported that its net loss as of March 31 was $589 million. At the end of last year, its losses were $168 million. Meanwhile, its revenue dropped by one-fourth, from $2 billion to $1.5 billion. Calpine has lowered its cost of debt service, according to the filing. Rents, maintenance, and debt service together were $971 million as of March. In December 2005, they totaled $1 billion. However, the company’s obligations accelerated in the last few months. Those obligations include the Geysers geothermal plants, which were leased to a subsidiary in February. The lenders for the Metcalf facility in San Jose waived default in exchange for a fee of one-fifth of 1 percent of the loans. Both have been reclassified as current obligations. Calpine filed for bankruptcy protection at the end of 2005. The company plans to lay off more than 1,000 workers and sell 20 power plants. The bankruptcy court set August 1 as the deadline for filing proofs of claim – extending it from June 30. “At this time, it is not possible to accurately predict the effects of the reorganization process on the business,” the company said in the filing. “Whether or not a plan or plans of reorganization are approved, it is possible that the assets of any one or more of the Calpine Debtors may be liquidated.” Pending is a California Public Utilities Commission decision on the price that Pacific Gas & Electric is supposed to pay for Calpine’s QF contracts, which would reduce the struggling generator’s liability. The utility and Calpine submitted amendments to the contracts to the bankruptcy court last April. Those amendments would authorize PG&E specifically to pay an adjusted price in exchange for deleting retroactive refund liability for payments based on an earlier pricing policy.

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