Several plants under construction may be sold
By Michael Liedtke, AP Business Writer
San Francisco – Electricity wholesaler Calpine Corp. said Tuesday that it will jettison about 20 power plants and lay off another 775 workers, continuing to retreat from a rapid expansion that buried the company in debt and drove it into bankruptcy.
The San Jose-based company didn’t identify which of its 92 plants – scattered across 21 states and Canada – it hopes to sell before the end of the year. Several plants currently under construction might be included in the purge. Calpine’s largest clump of power plants is in California and Texas.
The projected job cuts will affect about one-fourth of Calpine’s remaining work force of 2,900 employees, company spokeswoman Katherine Potter said. About 100 employees lost their jobs Tuesday and the remaining pink slips will be handed out as Calpine’s fleet of power plants shrinks.
Coupled with another mass layoff announced in February, Calpine will have shed more than 1,100 employees since filing for Chapter 11 bankruptcy protection in late December. Calpine doesn’t anticipate any other large-scale job cuts, Potter said.
Besides selling power plants, Calpine also is closing three offices in Atlanta, Boston and Dublin.
Since its bankruptcy filing, Calpine has pruned its annual expenses by about $150 million, including a projected $100 million in savings from the latest cuts.
Shortly after Calpine’s first wave of layoffs this year, Calpine’s directors voted to nearly triple their salaries to $125,000 annually. The company also has guaranteed to pay its recently hired chief executive, Robert May, $3.75 million this year and pledged to pay him a $12 million bonus if he can lift Calpine out of bankruptcy.
The retrenchment being led by May contrasts sharply with the expansion spree orchestrated by his predecessor, Calpine founder Peter Cartwright.
Emboldened by Calpine’s soaring profits and stock price in early 2001, Cartwright borrowed heavily to double the company’s size and establish it as one of the nation’s largest power wholesalers with enough capacity to light more than 20 million homes.
But as Calpine grew, electricity prices and demand sagged, making it increasingly difficult for the company to repay debts that totaled $18 billion at the time of its bankruptcy. The adverse market conditions have saddled Calpine with losses of $926 million since 2003.
Cartwright, who was fired in November, and several Calpine directors are now the targets of a class-action lawsuit alleging the company’s shareholders were misled as the business unraveled.
Some shareholders suffered huge losses as Calpine’s stock price plunged from a peak of nearly $60 in 2001. Calpine’s shares closed unchanged at 26 cents in Tuesday trading on the over-the-counter market.
