San Jose, CA, Feb. 07, 2006 — Calpine Corp. has filed a Notice of Rejection of certain facility lease agreements related to the control of two combined-cycle power plants in New England.
Calpine filed its notice with the U.S. Bankruptcy Court for the Southern District of New York as part of its bankruptcy proceedings. The action is part of Calpine’s recently announced plan to stabilize, improve, and strengthen the company’s core power generation business and its financial health, which includes a round of layoffs totaling 300 jobs.
Calpine’s leasehold interest in the two power plants is extinguished as of February 6, 2006, unless the bankruptcy court determines otherwise. The owner- lessor, a subsidiary of Philip Morris Capital Corporation (PMCC), will take possession and control of the plants.
Robert P. May, Calpine’s CEO, said after review, Calpine “determined that continuing to operate the facilities under the terms of these leases would be uneconomic for Calpine and would cause significant harm to the bankruptcy estate.”
The affected power plants, located in Rumford, ME and Tiverton, RI, represent a combined 530 megawatts of installed capacity with the output sold into the New England wholesale market. Calpine said they will cooperate fully with PMCC to facilitate a smooth transition and ensure the plants’ continued ability to deliver reliable power.
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