I'm really disappointed with the judgement of management. It would seem that they have told select analysts that they will be cutting a few projects and lowering forecasts. While in itself I think that's fine -- Calpine is still worth double where it is now based on their assets and hedged contracts, what they did flies, at the very minimum, in the face of Regulation FD. And at the very minimum they have shattered the trust of individual shareholders. Why should anyone have a trading advantage over anyone else? At the very worst, they broke the law.
While I can see that they mentioned something to that effect to analysts -- once they mentioned it to anyone whether blatently or inadvertantly, they should have made a press release. What they did is in very poor taste -- purposely shafting individual shareholders for a little discomfort on their part in putting out a newsrelease to all.
Here's the article:
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Analysts Say Calpine Warned Of Cuts To Earnings, Capex
By Jason Leopold
01/04/2002
Dow Jones Energy Service
(Copyright (c) 2002, Dow Jones & Company, Inc.)
LOS ANGELES -(Dow Jones)- Calpine Corp. (CPN) has told several Wall Street
analysts that it will announce capital spending cuts and lower earnings
estimates next week, analysts contacted by the company said Friday.
The analysts said they also were told by senior Calpine finance officials that the company is trying to close on an expanded line of credit without having to post collateral.
"What's going on behind the scenes is that everyone expects Calpine's earnings to go down a bit," said Neil Stein, an analyst with Credit Suisse First Boston in New York, who rates Calpine a "strong buy."
Stein, who was contacted by Calpine last week, said the company has indicated to him that it will scrap some power plant projects that are in development but on which ground hasn't yet been broken and will lower its earnings guidance. Other analysts confirmed that they too had been contacted by Calpine, which told them they should be prepared for an announcement.
Asked if the company had called the analysts, Calpine spokeswoman Katherine Potter said, "We have discussions with analysts all the time."
"As we previously discussed on many occasions and publicly, investors can expect to hear details on the following issues: our working capital revolver, our earnings expectations, and our capital and development program," Potter said. "Nothing is scheduled yet, but we do expect to give an update shortly."
Calpine executives said on a Dec. 11 conference call that the company wasn't revising any of its earnings forecasts, but indicated they would be "taking a look at the entire portfolio."
Neither lowered earnings guidance nor cancellations of power plants would surprise Wall Street, analysts said. The big question is whether Calpine can expand its corporate credit line without posting collateral.
"A lot of the negative news is known as far as the direction of earnings estimates," Stein said.
Calpine is seeking to expand its revolving corporate credit line to $1.5 billion from $400 million. The company is in talks with banks and hopes to make announcement sometime next week, Potter said.
Last month, in a conference call with Wall Street analysts, Calpine said it expected to increase its corporate credit line by Jan. 4 and that it had commitments from several banks. Those efforts were delayed by Moody's Investors Service's decision to downgrade Calpine's debt to junk-bond levels, Potter said.
Calpine has about 12,000 megawatts of generation capacity. It has more than 17,000 megawatts under construction, on which it will have to spend about $2.5 billion over the next 18 months, and other plants in development. The company's aggressive construction plans have concerned some ratings agency and equity analysts, who point to tighter capital markets and falling power prices.
Calpine shares closed Friday up 95 cents, or 5.97%, at $16.85.
-By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com; |
