Calpine Restructures Agreements With Turbine Manufacturers
Tuesday, February 11, 2003
Company Reduces Turbine Capital Commitments by $3.4 Billion
SAN JOSE, Calif.,- Calpine Corporation (NYSE: CPN) today announced that it has entered into restructured agreements with its major gas and steam turbine manufacturers -- including GE Power Systems, Siemens Westinghouse and Toshiba International Corporation -- giving Calpine the option to cancel its existing orders for 87 gas turbines and 44 steam turbines. The new agreements significantly reduce the company's future capital commitments by approximately $3.4 billion and provide greater flexibility to match equipment commitments with Calpine's revised construction and development program.
"This latest phase of Calpine's restructured turbine program reflects our continued focus on further reducing future capital expenditures," stated Calpine Chairman and CEO Peter Cartwright. "We appreciate our turbine equipment manufacturers' continued support in meeting our near- and long-term goals. As we enter 2003, Calpine remains determined to strengthen liquidity, improve our creditworthiness and enhance value -- for our investors and our customers."
As a result of these restructured agreements on the 87 gas turbines and 44 steam turbines:
-- Calpine agreed to pay approximately $109 million for the restructuring
of the agreements and cancellations of certain equipment. To date,
approximately $91 million has been paid. The remaining payments will
consist of $9 million in 2003, $6 million in 2004 and $3 million in
2005.
-- If Calpine elects to go forward with a turbine, the company and the
manufacturer will negotiate the purchase price, and Calpine will
receive credit for payments previously made for that turbine.
-- Calpine can now tailor its turbine program around future project
opportunities and will only incur an additional capital commitment when
a new turbine is required.
Of the 87 gas turbines and 44 steam turbines, the company has cancelled 11 gas turbines and 2 steam turbines. If Calpine were to cancel all of the remaining turbines, future turbine capital commitments would be reduced by $3.4 billion.
Calpine will record a pre-tax charge of approximately $207 million in the quarter ended December 31, 2002, which represents all costs associated with the potential cancellation of all 87 gas turbines and 44 steam turbines.
Calpine's remaining capital commitment for turbines is now approximately $594 million, down from approximately $4 billion. This capital commitment is summarized below:
-- Turbines for projects in operation and construction. Approximately
$131 million. $127 million in 2003 and $4 million in 2004. These
amounts are included in the company's construction capital expenditure
guidance.
-- Separate commitments for 38 gas and 9 steam turbines to be used for
future projects. Approximately $445 million. $285 million in 2003,
$143 million in 2004 and $17 million in 2005.
-- The 76 gas turbines and 42 steam turbines remaining under the
restructured agreements. Approximately $18 million. $9 million in
2003, $6 million in 2004 and $3 million in 2005. |
