Calpine CEO: Focusing On Internal Growth, Not Consolidation
01 April 2009 - 6:26AM
Dow Jones News
Independent power producer Calpine Corp. (CPN) is more focused
on building its own power generation business rather than merging
with another company, Calpine's top executive said Tuesday.
"I have a history in 'M&A,'" but Calpine's "high-return
organic growth prospects" such as its natural gas and geothermal
power plants have more value than fleets of other companies, said
Calpine President and Chief Executive Jack Fusco, speaking with
analysts in Houston.
Calpine is pursuing development of new power plants for which
the company is close to signing power purchase agreements, said
Thad Hill, executive vice president and chief commercial
officer.
Calpine also plans to invest about $100 million over the next
three years to upgrade up to 34 power-plant turbines with more
powerful turbines made by Siemens AG (SI) that will improve
economic returns, Hill said. These investments are expected to
yield earnings of about $30 million a year before taxes, Hill
said.
The company expects California regulators to approve soon a
contract it signed with PG&E Corp. (PCG) for the output from
its 600-megawatt Russell City gas-fired power plant in Hayward,
Calif. General Electric Co.'s (GE) GE Financial Services unit is an
investor in that plant.
Fusco said there were "several" merger or acquisition
opportunities available, but that Calpine was looking at individual
assets, such as power plants, for any purchases. He also suggested
that tight credit markets have made raising capital difficult and
expensive for Calpine.
"The credit markets haven't been kind to the high-yield
community in which Calpine participates," he said.
Calpine reiterated its 2009 earnings guidance of $1.6 billion to
$1.7 billion before taxes, depreciation and amortization.
Calpine shares were recently trading 45 cents higher at $7 a
share.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468;
cassandra.sweet@dowjones.com