12 Mar 2002 – Calpine Corporation today reported that it has completed a significant restructuring of its gas and steam turbine purchase program. This new turbine program reduces previously forecasted capital spending by approximately $1.2bn in 2002 and $1.8bn in 2003. These cash savings are the result of agreements with its major turbine manufacturers, including GE Power Systems (GE), Siemens Westinghouse (Siemens) and Toshiba, to defer or cancel existing turbine orders.
The first phase of the restructured turbine programme includes agreements with GE, Siemens and Toshiba to adjust the timing of delivery and related payment schedules. With these agreements, Calpine has deferred the delivery and payment on 81 turbines originally slated for delivery between 2002 and 2005. Calpine will not incur any additional cash charges as a result of its revised turbine delivery and payment schedule.
In phase two of this program, Calpine has cancelled orders for 34 GE gas turbines and one GE steam turbine. As a result of this cancellation, Calpine will record a non-cash, pre-tax charge to earnings in the first quarter of 2002 of approximately $161m, which includes financing costs to date. After netting the amount of Calpine’s turbine payments with GE’s cancellation fee, Calpine’s cash payment to affect the cancellation is immaterial.
“Calpine’s restructured turbine programme further demonstrates our commitment to reducing capital expenditures in the face of short-term conditions in the power and financial markets,” said Pete Cartwright, Calpine Chairman and CEO. “We continue to evaluate a full range of options to further enhance our financial strength. We are doing what it takes to increase liquidity and enhance creditworthiness while bringing new power generation capacity on line when — and only when — power and capital market conditions warrant.”
With its new turbine program in place, Calpine has 127 F-type gas turbines on order for delivery between 2002 and 2007. The company will continue to evaluate the economics of the current program, including its cancellation and deferral options, and may continue to restructure the program in the future.
Based in San Jose, California., Calpine Corporation is an independent power company that is dedicated to providing customers with clean, efficient, natural gas-fired power generation. It generates and markets power, through plants it develops, owns and operates, in 29 states in the United States, three provinces in Canada and in the United Kingdom. Calpine also is the world’s largest producer of renewable geothermal energy, and it owns and markets 1.3 trillion cubic feet of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its website at www.calpine.com.