4 April 2006 — Calpine Corporation announced today additional steps to streamline the company, reduce costs, and reorganize its overall organization as part of its restructuring. Calpine has identified for potential sale a number of non-core and non-strategic power plants. The company is also closing three additional offices, and, as the company completes asset sales and construction activities, will reduce its workforce by 775 employees. Through these actions, Calpine is taking steps to improve its financial performance, enhance its overall value and make measurable progress towards emerging from Chapter 11 a profitable and more competitive company.
“We are refocusing Calpine’s resources on what we do best, power generation. We’re downsizing our portfolio and market reach, and focusing on core assets and markets where Calpine can best compete,” Robert P. May, Calpine’s Chief Executive Officer, stated.
A systematic review of the entire company has identified approximately 20 power plants in operation or under construction that are no longer considered to be core operations due to a combination of factors, including financial performance, market prospects and strategic fit. Accordingly, the company will be seeking to sell the majority of these assets by the end of 2006. At the completion of this effort, Calpine expects to retain a generating portfolio of clean and reliable geothermal and natural gas-fired power plants located in North American markets.
As noted above, to further reduce costs, Calpine has initiated measures to close offices in Atlanta, Ga., Boston, Mass., and Dublin, Calif. Day-to-day business operations will be primarily consolidated into Calpine’s San Jose, Calif. headquarters as well as offices in Houston, Texas, and Folsom, Calif.
Taken as a whole, these restructuring activities also necessitate a decline in staffing to levels appropriate for a smaller, more streamlined organization. As a result, Calpine will reduce staffing by approximately 775 positions, the majority of which will take place by the end of 2006 as the company completes both plant sales and construction activities. Approximately 100 employees will be immediately affected.
“We’re making the tough decisions that are essential for Calpine to emerge from bankruptcy a viable and valuable enterprise,” May added. “I’m encouraged by the progress we are making in our restructuring. Together with our cost-cutting actions announced in February, we will reduce our annual costs by over $150 million. I believe Calpine has good people, good assets, and all the right ingredients for long term success.”
Calpine and many of its subsidiaries filed to reorganize under Chapter 11 on Dec. 20, 2005, in the U.S. Bankruptcy Court for the Southern District of New York.