CPN: Calpine Corporation Message Board

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Gold/Mining/Energy : CPN: Calpine Corporation

FRO 23.66

-0.3%

Nov 7 9:30 AM EST

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To: Howard R. Hansen who wrote (238)	1/6/2002 12:24:54 AM
From: ptanner	Read Replies (1) of 555

re: "Are you saying that when a holder of one of these convertible notes converts his note into common stock he/she has to pay $18.07 per share for their common stock he/she receives? Up to now I had been under the impression there was a straight swap of a convertible note for X number of shares of Calpine stock when the price of Calpine exceeded $18.07 per share. Which is it? " The holder of the convertible bond has the option of converting the bond principal to shares at a price of $18.07/share. The holder doesn't send a check but instead forgoes the return of the bond's principal value and any further interest payments. The conversion is not automatic and the bond prices will fluctuate based on the share price, conversion price, volatility and the time period on the bonds (eg. when they will mature or may be called by the issuer) so the bond holder doesn't have to convert in order to realize the value of a convertible bond which is "in the money" - not sure of the correct term. I am not familiar with all the specifics of CPN's recent issue nor overly familiar with convertible bonds as a direct investment, but IMO the 23% conversion premium seemed too low, particularly in combination with a 4% coupon for a 5-year bond. Still, it seems better (from a shareholder perspective) than just issuing additional equity at the then-current price and the market seems to feel more comfortable with CPN's financial position. HTH, -PT

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