Calpine Corporation Files for Chapter 11 Bankruptcy and Subsidiaries in Canada Intend to File Under Creditors Arrangement Act

Strategic Insights -

Calpine Corporation, a major player in the energy sector, has filed for Chapter 11 bankruptcy protection in the United States, and its Canadian subsidiaries will follow suit by filing under the Canadian Companies' Creditors Arrangement Act. This move affects Calpine Power Income Fund, an unincorporated open-ended trust that invests in power assets in Western Canada and California. Despite this development, Calpine's entities remain up-to-date on their obligations to the Fund, and the Fund is in a strong cash position. The Fund is currently assessing the potential impact of these proceedings on its future cash distributions and is working with advisors to evaluate all possible implications.

Key Takeaways:

  • Calpine Corporation has filed for Chapter 11 bankruptcy protection in the United States, effective December 20, 2005.
  • Certain subsidiaries of Calpine in Canada, including Calpine Canada Power Ltd. and Calpine Energy Services Canada Partnership, intend to file under the Canadian Companies' Creditors Arrangement Act.
  • The Fund, Calpine Power Income Fund, is not directly affected by these proceedings but will be impacted by the potential effects on its subsidiaries and specific contracts such as the Tolling Agreement.
  • The Fund has sufficient cash and is working with independent counsel, financial advisors, and other consultants to evaluate the implications of these proceedings.
  • Calpine King City Cogen LLC and Calpine Canada Whitby Holdings Company, subsidiaries not directly affected by the proceedings, lease and own interests in power-generating facilities respectively.
  • Calpine's only relationship with the Fund's Island Cogen facility is that of operator.

Statistics:

  • December 20, 2005: Calpine Corporation files for Chapter 11 bankruptcy protection.
  • Canadian Companies' Creditors Arrangement Act to be used by certain Calpine subsidiaries:

Sources:

  • Calpine Corporation press release, December 20, 2005
  • Calpine Power Income Fund (TSX:CF.UN) news release