Calpine gets Bids

I hate to bottom-fish as the market’s garbage lies along the floor of the exchanges. However, I have been highlighting Calpine over the past several months (12/6/06) as it has moved from $0.97 to $2.12. I have clearly indicated the institutional accumulation on the daily and weekly charts and even backed them up with official institutional reports in a post titled Calpine Comeback? (3/15/07)

Yes, the stock is speculative but I just can’t ignore the accumulation on up-days. The stock has been falling on ligher volume and gaining large chucks on huge volume.

Market makers? Pumpers? Schemers?

Something tells me no in this case and I went out and bought shares in a sub $10 stock to follow my beliefs. As I disclosed in my last blog post, I grabbed shares at $1.31 although the position is much smaller than my typical size due to the speculative nature of the trade. However, if the stock makes a comeback, I will be rewarded handsomely on my shares with very low risk. The position is now up 59% at the end of the day today after a 17% gain on volume double the daily average.

The article below makes me feel good but I will continue to trade the charts in this stock, not the news and see where it takes me. So far, so GOOD! (I still prefer buying a $130 stock such as NMX but CPNLQ is making new 52-week highs).

Calpine gets bids from firms, companies-sources
By Caroline Humer and Michael Flaherty

NEW YORK, March 28 (Reuters) – Bankrupt Calpine Corp. (CPNLQ.PK) has received offers from financial and corporate buyers, including at least one bid for the entire company, according to sources familiar with the situation, in the latest sign of a revival in demand for power generating companies.

The company, which listed more than $26 billion in assets before it filed for bankruptcy, invited bidders earlier this year to make offers for part or all of its equity as part of its bankruptcy process and bids were due earlier this month, sources said.

It is still uncertain that the company, which operates power plants in California, Texas and elsewhere in the United States, will accept any of the offers as it weighs them as one possible means to emerge from bankruptcy.

A Calpine spokesman declined to comment.

The Carlyle Group [CYL.UL], which makes energy investments with its partner Riverstone Holdings, was among the private equity firms interested in Calpine, a source familiar with the deal said, adding that Carlyle was teamed up with power plant owner AES Corp. (AES.N: Quote, Profile , Research). Sources said that other private equity firms were also interested.

Carlyle and AES declined to comment.

At a hearing earlier this month in U.S. Bankruptcy Court of the Southern District of New York, Calpine’s lawyers asked for approval for Calpine financial adviser Miller Buckfire to broaden the company’s mandate to include the possibility of raising equity financing, according to court documents.

The company, based in San Jose, California, owns and operates more than 25,000 megawatts of generating capacity.

BUYING UP ASSETS

Demand for power assets has increased in the past few months amid signs that generating capacity could be tightening and private equity investors have begun pursuing the sector again after having failed at takeovers in Oregon and Arizona several years ago.

Kohlberg Kravis Roberts & Co. [KKR.UL] and Texas Pacific Group [TPG.UL] in February offered to buy TXU Corp. (TXU.N) for nearly $32 billion in the largest leveraged buyout to date.

The interest in power assets represents a change from when Calpine filed for Chapter 11 bankruptcy protection in December of 2005.

At that time, Calpine was still reeling from a credit crunch after the California energy crisis and the collapse of energy company Enron Corp. Asset sales were not enough to offset the cost of its $17 billion debt burden and after a court ordered it to pay creditors who had sued about how the company was using its cash, it filed for bankruptcy.

Calpine, whose bankruptcy is among the largest U.S. corporate insolvencies in recent history, received an extension from the court in December of 2006 allowing it to file its reorganization proposal by June 20, 2007.

The company should be in a position to select final proposals in the early part of May, one source familiar with the situation said, which would give it time to file its plan by the June 20 deadline.

The bids included proposals for everything from injecting equity directly to buying the whole company, the source said, and the company is now evaluating these offers.

The equity financing process, which is running alongside the company’s debt financing efforts, aims to raise the additional funds needed to pay the second lien debt, which totals $3.6 billion, the source said.

But according to another source, the equity bids were not attractive enough and the company is likely to instead work on a reorganization plan that focuses on coming out of bankruptcy on its own before considering a sale.

The ongoing bankruptcy proceedings make determining the total value of the company difficult.

Calpine received court approval earlier this month for a $5 billion debtor-in-possession credit facility that could be expanded to $7 billion and could be rolled over to become exit financing.

Since Calpine filed for bankruptcy, the company has sold off numerous assets as part of a plan to sell about 20 power plants, or about one-fifth of its total fleet, in a bid to emerge as a leaner company focused on profitable generating capacity in the core markets of California and Texas. (Additional reporting by Lisa Lee)