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Gold/Mining/Energy : CPN: Calpine Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (270)	2/1/2002 5:04:46 PM
From: Softechie	Read Replies (1) \| Respond to of 555

What do think of this article. Cash Getting Crunchier at Calpine By Peter Eavis 01/31/2002 17:20 -------------------------------------------------------------------------------- Calpine's CPN cash crisis continues. The company reported fourth-quarter earnings Thursday and offered its 2002 outlook, but said little that would alleviate concerns that the power producer faces the mother of all cash crunches this year. Calpine has said it would consider returning to the capital markets, but that's a fate debt-heavy Calpine would do better to avoid given the weakness in its shares; the company didn't immediately return calls seeking comment Thursday. Calpine stock, which is more than 75% off its 52-week high, added 14 cents to close at $11.20. On a conference call Thursday and in its fourth-quarter earnings press release, the company offered additional detail on uses and sources of cash, allowing us to update the calculations we made on Jan. 18 (see below). As the table shows, Calpine's expected cash sources, totaling $4.38 billion, barely cover its needs, of $4.36 billion. And that's taking the company's numbers at face value. So what might not pan out in Calpine's own numbers? One big risk is that the cash flow number of $1.2 billion might be hard to achieve. That figure is based on an EBITDA (earnings before interest, taxes, depreciation and amortization) projection of $2 billion. But, despite being asked, the company wouldn't offer a power-sales margin on the call; that data would've allowed investors to test that forecast. And with gas and power prices slumping, that $2 billion looks aggressive -- meaning the $1.2 billion in operating cash flows also looks tough to achieve. There are other potential cash uses that Calpine didn't factor into its calculation. The company has said that it'll have to make a net payment of $160 million to Enron to cancel a gas contract, but it declined to say how much of that cash it thought it might have to pay out in 2002. The company didn't give details on any payments it may have to make to cancel equipment purchases. Updated Calpine Cash Analysis Company projections for 2002, in millions of dollars Sources Uses Cash on hand $1,800 Capital spending $2,500 Credit lines 875 Lease payments 330 Operating cash flow 1,200 Payments of debtlike securities 60 Sale leaseback 500 Maintenance 250 Working capital 400 Repay bonds 819 Total 4,375 Total 4,359 Source: Detox There's also a chance that Calpine, with its credit rating under pressure, may find it hard to find partners to raise the $500 million from the sale-leaseback deal. And cash taxes will probably be higher than the forecast $100 million in 2002. Let's re-do the numbers. If we say EBITDA comes down to $1.7 billion and cash taxes are $50 million higher, that takes operating cash flows down to $850 million. Let's then assume Calpine makes only $250 million through sale-leaseback. In total, then, sources of cash would be $600 million lower at $3.78 billion. We could increase the cash uses by $80 million to cover half of what Calpine owes Enron, and add $10 million for plant cancellations. This would take the total use number up to $4.45 billion, or $670 million higher than sources. Now, Calpine says it can raise some $500 million from other sources if it has to. It will have to. csfbdirect.com