The Associated Press
SAN FRANCISCO — Seeking to reassure investors about its financial strength, rapidly expanding power generator Calpine Corp. said Wednesday it plans to raise $400 million in a private placement of debt that can be converted into the company’s stock.
The placement comes amid deepening concerns about Calpine’s plans to build 30 power plants during the next year. This month’s bankruptcy of industry giant Enron Corp. raised questions of taking on new debt to add more generating capacity during a time of falling energy prices.
Calpine’s plans received another setback when Moody’s Investor Service downgraded the company’s credit rating to junk.
San Jose-based Calpine has maintained that it remains a healthy business and Wednesday’s announcement seemed to hearten investors. The company’s shares gained 69 cents to close at $14.69 on the New York Stock Exchange.
Calpine plans to use the proceeds to shore up its balance sheet by buying back a portion of its zero-coupon convertible debentures. The debt on those securities totaled $878 million as of Dec. 12.
The interest rate on the new debt, as well as the stock conversion ratio, will be determined at a later date, Calpine said.
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