CPN - Calpine (CPNL.PK)

**tuabie** Wed Nov 30, 2005 2:01 am

CPN - Calpine (CPNL.PK)
Blast,

CPN has dropped huge recently and is now only at $0.54.... is there value in this stock? Your comments appreciated.

**blast_investor** Wed Nov 30, 2005 2:29 am

Hi tuabie,

I was big fan of NRG but I have never been a fan of CPN. NRG and CPN are in same sector, all in power generation business, but they are in different world in terms of their stock attractiveness. You can search on term "CPN" on this forum for my old comment on CPN.

This Calpine stock looks cheap by price to book or price to sale ratio. But actually, price to book is not reliable number to use for thorough value investing research. This is because the majority book value of CPN is in property, plant and equipment. In a fire sale liquidation, equipment and plant is not worth that much.

I would stay away from a stock like CPN. Big drop with 50% haircut does not mean that a stock is cheap.

**blast_investor** Tue Dec 06, 2005 3:03 pm

Calpine was delisted from NYSE.

According to company, Calpine stock will be traded in OTC market.

According to recent Wall Street Street Journal report, a S&P analyst estimated that if Calpine goes to bankcruptcy, the common shares will be wiped out, the senior debt will get full value back, and junior debt will get 80 cents in a dollar. Therefore, the fair value for Calpine stock is 0 dollar a share based on this S&P analyst.

By looking at Calpine balance sheet, there is no reason not to believe S&P analyst's view, which is essentially similar view as mine.

**yongxin** Tue Dec 06, 2005 3:15 pm

thanks
Thanks, I still remember this e-mail you reply to me!

Posted: 26 May 2005 02:22 Post subject:

--------------------------------------------------------------------------------

This stock is speculative. Lots of debt, no earning due to down cycle of power sector.

It is up 33% today. lots of insider selling at current price last year. After selling off the power plant, I am not sure how much equity is left.
I would be cautious on this.
_________________

**blast_investor** Tue Dec 06, 2005 3:45 pm

Re: thanks
Yeah, still remember that. At that point, that stock was touted as $4 a share worth and there was speculating of acquisition of CPN by NRG.
It actually did trade close $4 a share.

What a crazy market.

yongxin wrote: Thanks, I still remember this e-mail you reply to me!

__

**goog** Thu Dec 08, 2005 2:34 pm

The latest balance sheet shows that CPN still has more than 2B cash. Where is the cash now?

**blast_investor** Thu Dec 08, 2005 3:38 pm

Now Calpine is in terrible situation. Essentially the cash disappeared by court ruling.

Recently bond/loan holders sued CPN that CPN should not use cash generated from asset sale, the cash should have been paid back to bond holders first. Court ruling agreed with bondholders.

The cash is no longer there now. Cash is needed to pay bond holders first. CPN is likely to go bankruptcy for lack of cash from this court ruling.

goog wrote: The latest balance sheet shows that CPN still has more than 2B cash. Where is the cash now?

**blast_investor** Thu Dec 08, 2005 3:52 pm

Lots of Calpine bond investors are hedge funds and private equity funds.

According to Wall Street Journal report, CPN bond holders are in ugly fight.

Usually bond investors are not that afraid if they know they can get money back from bankruptcy. But from S&P analyst research and from the balance sheet, it is obvious that junior bond investors are going to lose money.

**goog** Thu Dec 08, 2005 3:59 pm

Thanks, Blast. But the ruling only requires $312M payment or else having to pay all $3 billion of the second lien notes. Why can't CPN just pay the $312M so that they still have enough money for daily operation? I must miss something here.

blast_investor wrote: Now Calpine is in terrible situation. Essentially the cash disappeared by court ruling.

Recently bond/loan holders sued CPN that CPN should not use cash generated from asset sale, the cash should have been paid back to bond holders first. Court ruling agreed with bondholders.

The cash is no longer there now. Cash is needed to pay bond holders first. CPN is likely to go bankruptcy for lack of cash from this court ruling.

goog wrote: The latest balance sheet shows that CPN still has more than 2B cash. Where is the cash now?

**blast_investor** Thu Dec 08, 2005 5:10 pm

Well, if you look carefully on its cash position on recent 10Q, not much really. 1 billion is restricted cash, not available. 2006 maturity debt payback is 1.4 billion, 300 million here and there frozen, where is the money to pay back loan in 2006?

Here is article on CPN situation:
http://news.morningstar.com/news/DJ/M12/D02/200512021453DOWJONESDJONLINE000989.html

The above story is slightly more detailed than WSJ story. Basically CPN told court that it may not have that many money to pay back.

CPN CEO who was against bankruptcy was kicked out. Actually CPN is still losing money so that it does need cash to pay for the loss or burn rate. If CPN business is profitable, then the former CEO might still keep the job.

It is all about valuation again. It is still possible for CPN to avoid bankruptcy, that is the only hope for shareholders. When CPN is into bankruptcy mode, there is really no hope left for common shareholders. In such case, a possible big loss too for junior bond investors according to S&P analyst's prediction.

Any way, I believe CPN stock is worth 0 regardless of bankruptcy or not.

goog wrote: Thanks, Blast. But the ruling only requires $312M payment or else having to pay all $3 billion of the second lien notes. Why can't CPN just pay the $312M so that they still have enough money for daily operation? I must miss something here.

**blast_investor** Thu Dec 08, 2005 5:23 pm

Another terrible situation for CPN,

CPN is targeted by a group of smart shark-like hedge fund shorters.

These hedge funds short CPN stocks and buy CPN bonds. After they got bonds, they sue CPN and they want CPN to fail and they want CPN stock price to go to zero.

Wall Street Journal already reported that a huge amount of hedge fund managers purchased CPN bonds. What probably is true is that (WSJ hinted, but not said openly), the hedge funds want CPN stock price to go to zero. These hedge fund bond investors have no interest to support CPN business as usual.

I am not necessarily against shorters. Hedge fund shorters are right, for CPN this stock, emperor has no clothe. The CPN CEO and board has been fooling investors for too long. Stock market is just ugly. Whoever purchased CPN at close to $2 - $4 just months ago due to this "NRG acquisition rumor" is trapped.

**blast_investor** Tue Jan 10, 2006 11:50 pm

http://biz.yahoo.com/rb/051220/utilities_calpine_11.html?.v=3

Calpine Corp. files for Chapter 11 bankruptcy
Tuesday December 20, 11:50 pm ET

NEW YORK (Reuters) - Embattled power producer Calpine Corp. (Other OTC:CPNL.PK - News) said it filed for bankruptcy on Tuesday, weighed down by $17 billion in debt and battles with its bondholders over how to use its cash.

**blast_investor** Tue Jan 10, 2006 11:56 pm

CPNLQ.PK is still trading at $0.22 a share. Big loss again.

I do not believe stock market is efficient market. Mr. stock market does not know what stock is worth. In Calpine case, I believe
$0.22 is very expensive stock and the common shares most likely will be canceled. But it is still trading at such over-priced $0.22 a share.

Mr. stock market does not know what a common stock is worth especially those in bankruptcy news.

I do not do shorts. But in Calpine case, Calpine shorts (mostly hedge funds) were correct, longs were on hopeless hope.

**yongxin** Wed Jan 11, 2006 12:08 am

IN the last several years, I did not lost money, but did not make money neither. I always made money in one stock and lost in the other one. This time, you save me on CPN. Then I made some in 2005.

Thanks,
Yong