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Calpine granted approval of $242 million Power Systems Mfg. asset sale
By Caroline Salls
Pittsburgh, March 7 - Calpine Corp. obtained court approval of the $242 million sale of substantially all of the assets of Calpine subsidiary Power Systems Mfg., LLC (PSM) to Alstom Power, Inc., according to a Calpine news release.
Calpine said the asset sale will advance its restructuring program to further focus the company's resources on core business activities that involve the production and sale of power in key markets in which it can best compete.
The sale is expected to close, pending regulatory approval, in the next 30 days.
"The sale of PSM represents a new beginning for PSM to grow and strengthen its business," Calpine chief executive officer Robert P. May said in the release.
"For Calpine, the sale will eliminate the capital commitment associated with the research, development and manufacturing of turbine components, while maintaining our ability to enhance our operations with the purchase of innovative PSM turbine products and services."
Following the sale, Calpine will purchase, on a preferential basis from PSM, turbine parts to be used in some of Calpine's combustion gas turbines throughout the company's fleet of natural gas-fired power generation facilities.
Alstom is expected to retain PSM's staff of more than 100 employees, the release said.
In January, Calpine initially obtained a $200 million bid from Marubeni Corp.
Since Marubeni was not the high bidder, Calpine will pay it a break-up fee of 2.5% of the purchase price.
The sale proceeds will be used to reduce debt and enhance liquidity.
Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05-60200.
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