LAKE COUNTY – A year and a half after it filed for bankruptcy, energy company Calpine Corp. has filed a reorganization plan to aid the company in emerging from Chapter 11 by year's end.
Calpine filed its Joint Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court for the Southern District of New York on Wednesday.
The 73-page plan explains Calpine Corp.'s plans to repay debts, provide return for stakeholders and build long-term viability for the company.
Robert P. May, Calpine’s Chief Executive officer, called the plan of reorganization “a significant milestone on our road to recovery and takes us one giant step closer to successfully reorganizing Calpine for the benefit of our stakeholders, employees, and customers.”
There's still a lot of work ahead, said May, but the plan provides a clear path for Calpine to emerge from bankruptcy as a stronger, more financially stable and competitive company in the energy industry.
Calpine declared Chapter 11 bankruptcy in December 2005. The plan filed Wednesday is a step in Calpine's plan to emerge from bankruptcy by Dec. 31, said Gregory L. Doody, Calpine Corp.'s executive vice president, general counsel and secretary.
During its restructuring, Doody said Calpine has undergone a series of changes. The company has been structurally streamlined, improved its balance sheet, reduced costs and rejected energy leases it felt were not profitable.
Court documents from the spring of 2006 show the company reduced its workforce by 975 jobs and closed offices in cities around the U.S. as part of a plan to reduce annual operation costs by $150 million.
The company also focused on its core energy assets, selling energy plants that were underperforming or “nonstrategic,” said Doody.
Court records showed that Calpine planned to sell as many as 20 plants that were either operating or under construction.
As examples, in February Calpine received the bankruptcy court's approval for the proposed sale of its 250-megawatt Goldendale Energy Center to Puget Sound Energy for $120 million. A month later, Calpine also received the court's permission to sell assets in Power Systems Manufacturing LLC for $242 million. Those were the latest in several property and asset sales Calpine has completed since declaring bankruptcy.
Calpine's operations in Lake County, however, are core to its future plans. Company officials told Lake County News in an interview earlier this year that they had no intention of selling off its geothermal plants at the Geysers.
Calpine owns 19 of 21 geothermal units in the 40-square-mile steamfield network, which is the world's largest geothermal facility, according to Dennis Gilles, Calpine's senior vice president for geothermal power operations.
The Geysers plants generate 725 kilowatts of power, enough to supply 725,000 households, Gilles reported.
Calpine's Geysers operations employs 350 of the company's 2,300 workers. Doody said the company has no plans to further restructure or reduce its workforce.
The company's commitment to keeping the Geysers appeared cemented late in May, when Calpine announced a $200 million plan to expand production at the Geysers through new investments in equipment and identifying new sources of geothermal power.
At that time, May said the strength of company assets like the Geysers helped the company receive the necessary financing commitments for the production expansion project. He said it was important to make investments in the company that it can sustain after emerging from bankruptcy.
May also said he hopes to stay with the company after it leaves bankruptcy behind. “I think there's a lot more value that can come out of our future assets,” which will come from bringing underperforming plants up to capacity and planning for future growth to meet demand.
The company already appears to be recouping some financial strength. Although Calpine planned to repay certain stock and equity holders at $1.80 per share, trading on Wednesday closed with stocks valued at $3.04.
On the debt side, Doody said Calpine entered bankruptcy with $18 billion in debt, which has since been reduced to $11 billion. Its reorganization plan is a “waterfall,” which pays creditors and shareholders in accordance with the bankruptcy code's priorities.
Included in its list of debtors is Lake County, according to County Administrative Office Kelly Cox. In January, the Board of Supervisors voted to pursue an $85,623 claim against Calpine.
Cox said the money is owed Lake County Special Districts. County documents show that the money was owed as a result of the joint operating agreement for the Southeast Geysers Pipeline Project.
Calpine estimates the company's total enterprise value will be between $19.2 billion and $21.3 billion after its bankruptcy emergence.
The bankruptcy court must approve the reorganization plan before it becomes final, Doody said.
“This has been the largest and most complex reorganization conducted under the new bankruptcy laws,” said Doody.
Calpine has been in discussions with other corporations interested in buying it outright, said Doody, but he said he couldn't comment further on the content of those talks or whether they were still under way.
E-mail Elizabeth Larson at
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