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Calpine sees bankruptcy claims exceeding $17.4 bln

In NEW YORK story headlined... "UPDATE 4-Calpine sees bankruptcy claims exceeding $17.4 bln" please read paragraph 2 as.... "The company said the increase will likely be due to creditors filing multiple claims for the same liability. Calpine does not believe any creditor will recover more than it is actually owed,"... instead of.... "The company said the increase will likely be due to debtors filing multiple claims for the same liability. Calpine does not believe any debtor will recover more than it is actually owed." (Corrects that it is the creditors who might be due compensation. The error first occurred in UPDATE 2)
/ Source: Reuters

In NEW YORK story headlined... "UPDATE 4-Calpine sees bankruptcy claims exceeding $17.4 bln" please read paragraph 2 as.... "The company said the increase will likely be due to creditors filing multiple claims for the same liability. Calpine does not believe any creditor will recover more than it is actually owed,"... instead of.... "The company said the increase will likely be due to debtors filing multiple claims for the same liability. Calpine does not believe any debtor will recover more than it is actually owed." (Corrects that it is the creditors who might be due compensation. The error first occurred in UPDATE 2)

A corrected version follows:

Bankrupt power producer Calpine Corp. said on Friday it expects claims in its bankruptcy case to be "significantly greater" than the company's total debt of $17.4 billion reported at the end of last year.

The company said the increase will likely be due to creditors filing multiple claims for the same liability. Calpine does not believe any creditor will recover more than it is actually owed.

In an annual report filed with the U.S. Securities and Exchange Commission, Calpine also said it was working on a new business plan that would make it cash-flow positive on an operating basis in 2007.

Bankruptcy analysts said Calpine's disclosure of higher expected claims from its creditors was not unusual for a large Chapter 11 case, but the situation was likely to delay the company's emergence from bankruptcy.

"This is a tad troubling," Anthony Sabino, professor of law and business at St. John's University in New York, said. "It means they did not have as good a handle on their liabilities as they should have."

Until Calpine can clarify to whom they owe money and how much "their emergence from bankruptcy will be delayed," he said.

Sabino said a liquidation of Calpine under Chapter 7 of the federal bankruptcy laws "is always a possibility but it's an unlikely outcome. They underestimated the claims and they have to be revised upward but that doesn't mean it's a death knell."

A Calpine spokeswoman said the company would not speculate on bankruptcy timing and added it will have a better understanding of the claims after filing deadlines are met.

The deadlines are June 30 for Canadian claims and Aug. 1 for U.S. claims.

San Jose, California-based Calpine has until Dec. 31 to file a plan of reorganization without having to contend with competing plans prepared by its creditors or others.

The company got an eight-month extension in April from Judge Burton Lifland in the U.S. Bankruptcy Court in Manhattan to file the plan.

The company, whose bankruptcy was among the 10 largest in recent U.S. history when it was filed last year, ended 2005 with total consolidated assets of $20.5 billion and a stockholders' deficit of $5.5 billion.

In the report, Calpine also said that the exclusivity period on its planned sale of the Otay Mesa power plant to a unit of Sempra Energy had expired and that the two sides were negotiating an extended exclusivity deal.

Calpine also disclosed that the salary of its former chief executive, Peter Cartwright, rose about 60 percent in 2005 to $1.6 million from $1 million. Cartwright lost his job as CEO on Nov. 28, 2005, and the company filed bankruptcy on Dec. 20.

The company said it lost $9.94 billion, or $21.44 per share, in 2005. Revenue for the year was $10.11 billion.

It also said it is considering liquidating or selling its Canadian assets as part of its bankruptcy.

Shares of Calpine were unchanged at 24 cents Friday on the Pink Sheets. (Additional reporting by Leonard Anderson in San Francisco)