Calpine IPO falls short of expectations
Power plant owner aiming to reduce debt
Tuesday, August 27, 2002
SAN JOSE, CALIF. -- Calpine Corp. has raised $215-million (Canadian), less than expected, in the initial public offering of an income trust fund that will hold stakes in its three Canadian electricity-generating plants.
The company, owner of power plants in 23 U.S. states, sold 23 million of the fund's units, or 44 per cent. The units were priced at $10 each, to yield 9.35 per cent, Calpine said.
The San Jose-based company has sold stock and scaled back construction plans to reduce debt as power prices fell and banks tightened credit for electricity producers and energy traders. Calpine had planned to raise $300-million from the offering, made only in Canada.
"The demand just wasn't there," company spokeswoman Katherine Potter said. Calpine still intends to sell the remaining 29 million units, she said.
The Calpine Power Income Fund will own 70 per cent of both a 225-megawatt generator in British Columbia and a 300-megawatt plant under construction near Calgary, Ms. Potter said. It will get interest payments from a loan to a 50-megawatt Whitby, Ont., plant half owned by Calpine.
Income trusts make cash payouts to holders of their units based on cash flow, or revenue less some expenses, and offer tax advantages to Canadian investors.
The total value of the offering was $230-million, the company said. Calpine spokesman Rob McManus said $15-million will be used for fees to lawyers, marketers and underwriters led by Scotia Capital Inc. and CIBC World Markets.
Separately, Calpine has completed $106-million (U.S.) in financing for a $150-million, 300-megawatt gas-fuelled power plant under construction near Denver. Terms weren't disclosed.
The plant is scheduled to open in May. Xcel Energy Inc.'s Public Service Co. of Colorado will supply the plant's fuel and buy its power under a 10-year agreement.
Calpine shares rose 75 cents or 15 per cent to close at $5.75 in New York Stock Exchange composite trading.
They have fallen 66 per cent this year.
Crédit Lyonnais led the financing for the six-year construction loan, Calpine said. |
