Calpine cuts estimate of investor recovery

Calpine Corp., the California power producer, on Monday reduced the projected recovery for its existing shareholders by 5.4% as it provided a clearer picture of claims facing the company in its bankruptcy.

Calpine previously estimated the midpoint of returns for shareholders would be $2.05 a share in new stock. In a revised description of its reorganization plan filed in U.S. Bankruptcy Court in New York, it cut that estimate to $1.94.

Calpine shares rose 9.8%, possibly a result of higher confidence in the company’s figures on shareholder recovery and creditors’ claims, along with its unchanged estimate of its post- bankruptcy value, an analyst said.

“The company is repeating it hasn’t changed its mind about the value, and that is providing reassurance,” said Daniele Seitz, a Dahlman Rose & Co. analyst.

Calpine, based in San Jose, didn’t alter the $20.3-billion projected enterprise value of its reorganized business that its investment bank, Miller Buckfire & Co., provided in June.

Holders of Calpine stock may recover as much as $3.01 a share, the company said Monday in its filing. That is down from as much as $3.28 a share.

The company updated June estimates of claims from various classes of creditors. Secured claims are projected to be from $132.2 million to $572.9 million, narrowing the previous range. Senior-note claims will be $953.1 million, down from as much as $956.8 million.

“The company is presenting a more concrete explanation of the massive amount of claims it is facing and how it is progressing,” Seitz said.

That may give shareholders hope they can convince U.S. Bankruptcy Judge Burton Lifland there is more value in the company, Seitz said.

Calpine said it would provide a final enterprise value to creditors in November, 10 days before creditor votes are due.

The company will be in court today seeking approval of the disclosure statement, which outlines its turnaround plan.

Calpine shares rose 15 cents, or 9.8%, to $1.68.