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From DJ Newswire: NEW YORK -- After announcing plans to sell 60 million new shares the night before, Calpine Corp. (CPN) sought Wednesday to reassure Wall Street that its business is sound. The company hopes to reach a deal within a few weeks to join its trading operation, Calpine Energy Services, to a partner with a high credit rating, executives told Wall Street analysts in a conference call. And, the executives said, Calpine has seen profitability in its basic business of producing electricity for sales to regulated utilities and industrial customers rise significantly in the past three weeks. "We want to return our credit rating to investment-grade status by end of 2003," Calpine Chief Financial Officer Bob Kelly said. "The new equity issue brings our cash cushion this year to well over $2 billion." The company`s current capitalization of 75% debt and 25% equity would improve to a 70-30 split with the sale of the new shares, which at Wednesday`s market price would bring the company about $720 million in cash. The stock-sale proceeds will be used to pay down debt, including some high-yield bonds now trading at low prices in the secondary market, and for cash on hand, Kelly said. The merchant power company will use earnings this year and in 2003 to reduce debt to 65% of its capital, which Calpine executives think is low enough to justify an investment-grade credit rating. On March 25, Standard & Poor`s downgraded Calpine`s unsecured debt rating three notches to single-B-plus after Calpine posted $4 billion in assets to secure about $2 billion in borrowings. Moody`s Investors Service later also dropped Calpine`s unsecured debt rating three notches, to B1. Calpine`s ratings had already been under pressure due to high debt and declining power prices. S&P analyst Peter Rigby later said Calpine wouldn`t reach investment-grade standing until 2004 at the earliest. Kelly is confident Calpine will be able to refinance some $2.4 billion in debt that matures next year. Costs will decline as expenses for new power-plant construction fall to about $800 million next year from $2.5 billion this year. Regarding the trading operation, Calpine is negotiating a possible joint venture with two companies and has been contacted by three or four other interested parties, Chief Executive and Chairman Peter Cartwright said. "We have the luxury of choosing the best one," Cartwright said. "We will make a public announcement when we reach a deal - probably within the next couple of weeks or so." On March 21, however, Cartwright said he was optimistic the company would have something to announce in April. Company executives characterized their renegotiation of their huge power contracts with the state of California, announced Monday night, as a success. As reported, Calpine agreed to terminate those contracts two years to 10 years early, but didn`t adjust its prices much and sold more than $200 million worth of additional generating capacity to the state for the balance of this year and for 2003. "I`m confident that in 10 to 15 years power prices will be higher, and we`ll market that energy," said Chief Operating Officer Jim Macias, who led the company`s renegotiations with California. "We don`t feel we had to give up much." The company said it is starting to see upward movement in both spot and forward prices for gas and power throughout the U.S. "The spark spreads in all the regions that we have a heavy concentration of plants in have gone up over $3 a megawatt-hour in the past several weeks," Macias said. The "spark spread" is the difference between power prices and gas costs, so it`s the basic measure of profitability for merchant power companies like Calpine, which generally produce power from gas-fired plants. Calpine said Wednesday that to meet its earnings guidelines it needs a spark spread of about $11 a megawatt-hour on the 30% of capacity that it hasn`t already sold for the balance of this year. The company lowered its full-year earnings expectations to $1.50 to $1.60 per share after extraordinary items and costs related to canceling equipment orders from about $1.70 per share. The new estimates reflect dilution that will follow the issuance of 60 million new shares, which will increase shares outstanding by about 20%. Some Wall Street analysts were clearly disappointed Calpine couldn`t wait a while before selling new stock, because the arrival finally of some good news might have boosted the company`s share price by summer. The gain in Calpine shares of about $1.50 Tuesday, due to the California renegotiations, was wiped out Wednesday morning by the new-stock announcement. Calpine shares were down $1.43 at $11.90 Wednesday afternoon. Calpine sought to convince investors that the equity offering, which surprised some analysts, won`t be followed by another stock sale any time soon. "We crank out some pretty good earnings this year and next year, so we don`t need to go back to the equity markets at all," Kelly said. "Starting in the summer of 2003, we`ll be trying to figure out what you do with the capital, whether to pay off debt or buy back stock, but we don`t need to do equity." ============= (1) Hmmm bislang war die Spark Spread-Kalkulation auf 6 bis 8 Dollar. Das hab ich mit meinen eigenen Ohren auf den CC`s im Januar gehört. (2) Da das Geld nun gezielt dem Zweck des Schuldenabbaus dienen soll, drücke ich nochmals ein Auge zu, da ich den Grundgedanken für richtig halte. Ich hoffe, dass es bald auch wieder erfreulichere Schlagzeilen geben wird. Zumindest bringen die Sommermonate wieder etwas Phantasie in die Energiepreise... |
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| aus der Diskussion: | Calpine |
| Autor (Datum des Eintrages): | Ant@res (25.04.02 19:08:16) |
| Beitrag: | 110 von 251 (ID:6253069) |
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