Looks like the Hedge Fund might have had something to do with today's rumor and apparently tried to spook some people with the "letter" which appears to have had no merit. It is fascinating to what lengths some will go to make $$.
Posted on 04/22/2005 4:34:01 PM PDT by MeneMeneTekelUpharsin
SAN FRANCISCO, April 22 (Reuters) - Calpine Corp. (CPN.N: Quote, Profile, Research) said on Friday market rumors that the independent power producer is planning to file for bankruptcy are untrue. Calpine said it is in compliance with all of its bond indentures and has no plans to file for bankruptcy protection. The company moved to quash the rumors after its stock plunged 31 percent to its lowest level since October 2002 and its bond prices fell. "The company continues to move forward on its 2005 financial program focused on reducing corporate debt, enhancing liquidity and strengthening its long-term contract portfolio," the San Jose, California-based company said in a statement.
Calpine has been seeking to sell assets and refinance much of its debt during the past three years as it struggles to recover from a credit crunch that followed the bankruptcy of industry leader Enron Corp. (EONPQ.PK: Quote, Profile, Research) in December 2001. Earlier this month, Calpine issued another statement saying a plan for the possible sale of its its Saltend power plant in Britain complied with all of its debt covenants and legal obligations. It made the statement after a bondholder, Harbert Distressed Investment Master Fund, sent a letter to Calpine's board saying the sale of the plant "was part of an effort to strip the value of the Saltend Facility out of Calpine Jersey." Calpine Jersey is a unit of Calpine. The Harbert letter said that if the value of the plant was stripped away, the company would be unable to meet its obligations under some of the debt covenants.
Calpine said that if Saltend is sold, "all proceeds will be distributed as permitted by Calpine's existing bond indentures and in compliance with all applicable laws." The power plant developer should release more detailed information about its financial position to investors, an analyst said. "Obviously the suggestion that all is well is not enough. They will have to be more forthcoming with new information," said Daniele Seitz, an analyst at Maxcor Financial. Calpine, which develops power plants fueled by natural gas, "has been put in a major squeeze with gas prices going through the roof," Seitz said. "The good side is they have moderated their construction program," she said. "It's not as robust as it once was and that should help. Asset sales would help them and alleviate pressures in the market." Seitz does not own shares of Calpine.
Calpine's bonds tumbled as much as 8 percentage points on Friday but recovered after the company issued its statement. The company's notes with an 8.5 percent coupon due 2008 last traded around 61 cents on the dollar, up from a low of 53 cents before the statement and about one-half cent higher on the day, according to MarketAxess. Calpine shares, one of the most active stocks on the New York Stock Exchange, slid as much as 31 percent to $1.70 on Friday in heavy volume, touching their lowest level since October 2002 before they were halted. The shares recovered after the company issued its statement and closed down 27 cents, or 11 percent, at $2.19. (Additional reporting by Michael Erman, Dena Aubin and Deepa Babington in New York)
Looks like the Hedge Fund might have had something to do with today's rumor and apparently tried to spook some people with the "letter" which appears to have had no merit. It is fascinating to what lengths some will go to make $$.
FYI
Also, it is now apparent that the stock was manipulated downward with the specific purpose of taking the the "stop-loss" orders that many individuals (who are clueles and don't watch their investments) placed. Effectively, this gave the market makers the legal right to steal the shares of those individuals at a cheap price.
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