CPN
3/21/02
sbclasslaw.com
The complaint charges Calpine Corporation and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Calpine owns, develops, acquires, and operates power-generation facilities and sells electricity and steam, primarily in the U.S. Calpine’s stock, which went public in 1996, on a split adjusted basis, went from $2 at the IPO stage to over $33 in January 2001. The complaint alleges that the Company’s stock price was very important because Calpine was planning at this time to build or acquire $15 billion of plants over the next four years. The financing for these plants was based on the performance of its stock because many of its bond buyers were looking to convert to common stock. If the stock did not perform, financing would be difficult to fund the Company's expansion. However, certain of Calpine's manipulative transactions, including those with Enron, such as inflated revenues, began to emerge on December 9, 2001.
On December 14, 2001, prior to the market opening, Moody’s Investors Service announced that it might cut the credit rating on Calpine’s $11.6 billion of debt to junk. In response, Calpine’s shares plummeted to $12.50, a more than 26% drop. Then, after the close of the market on December 14, 2001, Moody’s Investors Service announced that it had in fact cut its rating of Calpine’s debt to junk.
As now revealed, at all times during the Class Period, defendants issued false and misleading statements and press releases concerning the Company’s sale of and demand for power and the Company’s ability to generate sufficient cash revenue to service its debt. During the Class Period, before the disclosure of the true facts, the Individual Defendants sold their personally held Calpine common stock generating more than $34 million in proceeds and the Company raised billions of dollars in a series of debt offerings. |
