The value of Calpine, whose shares dropped more than 50 percent, has been a source of dispute between the company and its shareholders, and is seen as one of the main obstacles to its emergence from bankruptcy protection.
NEW YORK (Reuters) - Power company Calpine Corp <CPNLQ.PK>, which is trying to emerge from bankruptcy by December 31, said on Tuesday that it was worth about $900 million less than previously estimated, sharply cutting into returns for shareholders.
The value of Calpine, whose shares dropped more than 50 percent, has been a source of dispute between the company and its shareholders, and is seen as one of the main obstacles to its emergence from bankruptcy protection.
At the midpoint of the new valuation, shareholders could receive no recovery on their common stock, the company said. It previously had expected them to get a return of $1.94 per share.
Calpine shares were trading at 45 cents in the late morning, down from Monday's close of 92 cents. The stock had set a 52-week high of $4.15 in April.
!ADVERTISEMENT!Citing increased market volatility and falling values of its peers, Calpine now sees its total enterprise value at $18.3 billion to $20.4 billion, with a midpoint of $19.35 billion.
Enterprise value is a company's market capitalization plus debt and preferred stock, but excluding its cash.
At the $19.35 billion midpoint, Calpine estimates general unsecured creditors will recover 96.7 percent of their claims.
Since the Bankruptcy Court has yet to settle all claims against the company, Calpine also set high and low claim scenarios for recovery.
If claims are "high" at $9.62 billion, unsecured creditors should expect to recover 88 percent and shareholders nothing. If claims are "low" at $8.67 billion, unsecured creditors will recover the total amount, while shareholders will receive 41 cents per share at the midpoint valuation.
The company plans to emerge from Chapter 11 by December 31, before the expiration of its current $8 billion exit financing. Calpine secured the financing before the subprime mortgage debacle hit credit markets this summer.
An earlier analysis in June had indicated an enterprise value of $19.2 billion to $21.3 billion, with a $20.3 billion midpoint.
Some creditors had earlier argued that the company was worth $1.2 billion to $1.3 billion less than it said it was because of deteriorating market conditions, although shareholders have sought a higher valuation.
Calpine's financial advisor, Miller Buckfire & Co, also increased the company's projected cash earnings before interest, taxes, depreciation, amortization, operating rent and restructuring charges, based in part on future power and gas prices and lower corporate overhead costs.
The U.S. Bankruptcy Court for the Southern District of New York has set November 30 date as a deadline for creditors to object to Calpine's reorganization plan, with a December 17 hearing to confirm it.
The court will determine the total enterprise value of the reorganized Calpine following the confirmation hearing, the San Jose, California-based company said.
Calpine sought Chapter 11 protection in December 2005, burdened by more than $22 billion in debt and court battles with creditors on how to use its cash.
The company, whose more than 14,000 megawatts of generating capacity are in markets that include the high-demand states of Texas and California, struggled after it went on a credit-financed power plant building spree in the late 1990s.
(Reporting by Lisa Lee, Euan Rocha and Justin Grant; Editing by Derek Caney and Lisa Von Ahn)
