Calpine Emerges From Chapter 11

    Emerges as a Stronger, More Competitive Power Company Poised for Growth

    SAN JOSE, Calif. and HOUSTON, Jan. 31 /CNW/ -- Calpine Corporation (Pink
Sheets: CPNLQ; NYSE:   CPN) announced today that it has successfully emerged
from Chapter 11 bankruptcy protection.  The company officially concluded its
Chapter 11 reorganization after meeting all statutory requirements of the
company's Sixth Amended Joint Plan of Reorganization, including successfully
closing its $7.3 billion exit financing facility that includes a one-year,
$300 million bridge facility that is expected to be paid by the end of the
first quarter.  Calpine's Plan was confirmed by the United States Bankruptcy
Court for the Southern District of New York in an order entered on December
19, 2007.
    Calpine's stock is expected to begin "regular way" trading on the New
York Stock Exchange on or about February 5, 2008 under the ticker symbol CPN.
    "This is a wonderful day for all of us at the new Calpine," said Robert
P. May, Calpine's Chief Executive Officer.  "We are very proud of what we have
been able to accomplish over the past two years.  Calpine is now a stronger,
more competitive power company poised for growth in the energy industry.  We
are well positioned for future success, with a healthy balance sheet and a
$7.3 billion exit financing facility.  On behalf of the Board and management
team, we would like to thank the nearly 2,200 Calpine employees for their hard
work, perseverance and dedication over the past two years.  We'd also like to
thank our customers, business partners and the communities we serve for their
support throughout this process."
    Gregory L. Doody, Calpine's General Counsel, who has also served as the
company's Chief Restructuring Officer, said, "Calpine's restructuring was
truly remarkable.  In just over two years Calpine dramatically improved its
capital structure, reducing approximately $7.2 billion in debt while
generating a significant recovery for our creditors as a whole.  In addition,
we enhanced and streamlined our core power generation business. Together,
these financial and operating improvements have laid a strong foundation for
the future success of Calpine, its stakeholders, customers and employees."
    The Court approved Calpine's new nine-member Board of Directors, on
November, 20, 2007. The Directors are:

    --  William J. Patterson -- Chairman of the Board.
    --  Frank Cassidy -- Member, Compensation Committee.
    --  Kenneth Derr -- Chair, Compensation Committee.
    --  Robert C. Hinckley -- Member, Audit Committee and Member, Nominating
        and Governance Committee.
    --  Robert P. May -- Chief Executive Officer
    --  David Merritt -- Chair, Audit Committee.
    --  W. Benjamin Moreland -- Member, Audit Committee.
    --  Denise M. O'Leary -- Chair, Nominating and Governance Committee.
    --  J. Stuart Ryan -- Member, Compensation Committee.
    Under the Plan, Calpine intends to issue a total of 485 million shares of
reorganized Calpine common stock to holders of allowed claims.  The
reorganized Calpine common stock will trade on the New York Stock Exchange
under the ticker symbol CPN.  Calpine anticipates that it will make initial
distributions under the Plan to holders of allowed claims and interests on or
before February 10, 2008.  In addition to the 485 million shares, Calpine will
reserve 15 million shares for distribution pursuant to the terms of Calpine's
Management and Director Equity Incentive Programs, which will be implemented
pursuant to the terms of the Plan.
    In its first distribution, Calpine currently anticipates distributing on
account of allowed unsecured claims approximately 423 million shares of
reorganized Calpine common stock, each with an imputed value of $17.36 based
upon a $8.7 billion reorganized equity value and the face value of the exit
    Calpine currently estimates in connection with its first distribution
that: (1) general unsecured creditors will receive approximately 84.8 percent
of their allowed claims for principal and pre-petition interest; (2) holders
of the 7.625 percent Senior Notes Due 2006, 7.75 percent Senior Notes Due
2009, 7.875 percent Senior Notes Due 2008, 8.75 percent  Senior Notes Due
2007, and 10.5 percent  Senior Notes Due 2006 (the "Senior Notes") will
receive approximately 100.0 percent of their allowed claims for principal and
pre-petition interest; and (3) holders of the 7.75 percent  Contingent
Convertible Notes Due 2015 (the "Subordinated Notes") will receive
approximately 42.0 percent  of their allowed claims for principal and
pre-petition interest.
    In connection with its first distribution, Calpine also intends to set
aside 62 million shares of reorganized Calpine common stock on account of
disputed unsecured claims.  As claims are resolved, Calpine will make further
distributions of reorganized Calpine common stock on a periodic basis in
accordance with the terms of the Plan.  Based upon the $18.95 billion total
enterprise value of Calpine set forth in the Plan and Calpine's current
litigation-risk assessment of allowed claims, Calpine currently estimates
that: (1) general unsecured creditors will ultimately recover approximately
99.9 percent  of their allowed claims for principal and pre-petition interest;
(2) holders of the Senior Notes will ultimately recover approximately 100.0
percent  of their allowed claims for principal and pre-petition interest; and
(3) holders of the Subordinated Notes will ultimately recover approximately
75.0 percent of their allowed claims for principal and pre-petition interest.
    In accordance with the Plan, post-petition interest on the Senior Notes
and certain related claims will be held in escrow pending the resolution of
the Intercreditor Subordination Dispute between the holders of the Senior
Notes and holders of the Subordinated Notes described in detail in the Plan.
The recoveries for the holders of the Senior Notes and holders of the
Subordinated Notes under the Plan depend, in part, on the resolution of the
Intercreditor Subordination Dispute.  Calpine's estimates regarding the
ultimate recoveries under the Plan for the holders of the Subordinated Notes
set forth above assume that the holders of the Senior Notes will prevail in
the Intercreditor Subordination Dispute, although Calpine currently has not
yet taken any position with respect to such dispute.
    As part of the Plan, Calpine's old common stock will be cancelled and
holders of the old common stock will receive warrants to purchase new Calpine
common stock.  These warrants will be for an aggregate of approximately 48.5
million shares of new Calpine common stock and will have an exercise price of
$23.88 per share.  Cashless exercises will not be permitted.  The warrants
will expire on August 25, 2008.  The warrants will be distributed to the
holders of the old Calpine common stock pro rata based on the number of shares
of old Calpine common stock held at the time of cancellation.  Fractional
warrants will not be issued.
    Calpine Board of Directors:
    Frank Cassidy. Prior to his retirement in 2007, Mr. Cassidy was employed
at Public Service Enterprise Group, Inc., an energy and energy services
company headquartered in New Jersey, since 1969.  From 1999-2007, Mr. Cassidy
served as President and Chief Operating Officer of PSEG Power LLC, the
wholesale energy subsidiary of PSEG, which includes PSEG Nuclear, PSEG Fossil
and PSEG Energy Resources & Trade.  From 1996-1999, Mr. Cassidy was President
and Chief Executive Officer of PSEG Energy Technologies, Inc.  Prior to such
time, Mr. Cassidy held various positions of increasing responsibility at the
Public Service Electric and Gas Company.  Mr. Cassidy earned an M.B.A. from
Rutgers University in 1974 and has an electrical engineering degree from the
New Jersey Institute of Technology. He serves on the Compensation Committee.
    Kenneth Derr. Mr. Derr formerly served as Calpine's Chairman of the Board
and has been an independent Calpine director since May 2001. In addition, Mr.
Derr served as Acting CEO prior to the tenure of current CEO Robert P. May. He
retired as the Chairman and Chief Executive Officer of Chevron Corporation in
1999, a position that he held since 1989, after a 39-year career with the
company. Mr. Derr obtained a Master of Business Administration degree from
Cornell University in 1960 and a Bachelor of Mechanical Engineering from
Cornell University in 1959. In addition, he serves as a director of Citigroup,
Inc. and Halliburton Co. Mr. Derr is chair of the Compensation Committee.
    Robert C. Hinckley. Mr. Hinckley previously served as Vice President,
Strategic Plans and Programs, General Counsel and Secretary, and Chief
Operating Officer for Xilinx, Inc., a supplier of programmable logic solutions
in San Jose, CA. From 1988 to 1990, Mr. Hinckley was Senior Vice President and
Chief Financial Officer of Spectra Physics, Inc., a supplier of laser
products. Mr. Hinckley serves on the boards of directors of several private
companies and holds a B.S. in engineering from the U.S. Naval Academy and a
J.D. from Tulane University Law School. He serves on the Audit Committee and
the Nominating and Governance Committee.
    Robert P. May. Mr. May joined Calpine as CEO in December 2005. Over the
past 30 years Mr. May has served in various senior management and executive
positions, including non-executive Chairman of the Board of HealthSouth from
July 2004 to October 2005, and as interim President and CEO of Charter
Communications, January 2005 to August 2005. From March 2003 to May 2004, he
served as HealthSouth's interim CEO, and as interim President of its
outpatient and diagnostic division, from August 2003 to January 2004. At
Cablevision Systems Corp., where Mr. May was COO and a Director from 1996 to
1998, he was part of an executive team that helped transition the company
through new operating strategies and the use of new technologies. He also
serves as a member of Charter Communications' Board of Directors and Deutsche
Bank Americas' Advisory Board.
    David Merritt. Since October 2007 Mr. Merritt has served as Senior Vice
President and Chief Financial Officer at iCRETE LLC, a technology company in
the building materials industry. He served as Managing Director of Salem
Partners, LLC, an investment-banking firm, from October 2003 until September
2007. He has been on the boards of Charter Communications and Outdoor Channel
Holdings, Inc. since 2003. He also served as a director of Laser-Pacific Media
Corporation from January 2001 through October 2003, and served as chairman of
its audit committee. He was with KPMG LLP for 24 years, serving in a variety
of capacities during his years with the firm, including 14 years as a partner.
Mr. Merritt earned a Bachelor of Science degree in business and accounting
from California State University - Northridge.  Mr. Merritt is chair of the
Audit Committee.
    W. Benjamin Moreland. Mr. Moreland has served as Executive Vice President
and Chief Financial Officer of Crown Castle International Corporation, which
provides broadcast, data and wireless communications infrastructure services
in Australia, Puerto Rico, and the U.S. and has served in other senior
executive roles at Crown Castle since starting there in 1999. From 1984 to
1999, Mr. Moreland was employed by Chase Manhattan Bank, serving in various
roles of increasing responsibility in corporate finance and real estate
investment banking.  Mr. Moreland earned an M.B.A. from the University of
Houston in 1988 and has a finance degree from the University of Texas, Austin.
Mr. Moreland was appointed to the board of directors of Crown Castle
International Corporation in 2006. He serves on the Audit Committee.
    Denise M. O'Leary. Since 1996, Ms. O'Leary has been a private venture
capital investor in Woodside, California.  From 1983 to 1996, Ms. O'Leary was
an associate, then general partner, at Menlo Ventures, a venture capital firm
that provides long-term capital and management services primarily to
development-stage companies in such industries as Internet infrastructure,
semiconductors, software, financial services, and computer hardware.  Prior to
1983, Ms. O'Leary held various positions of increasing responsibility in
manufacturing engineering and management positions at Spectra Physics, Inc.
Ms. O'Leary earned an M.B.A. from Harvard Business School in 1983 and has an
industrial engineering degree from Stanford University. She is also a director
at Medtronic, Inc. and US Airways Group, Inc. She serves as chair of the
Nominating and Governance Committee
    William J. Patterson. Mr. Patterson is a managing director of SPO
Partners & Co., a private investment partnership that he joined in 1989. SPO
may initially hold more than 10 percent of the Company's common stock and may
be considered an affiliate of the Company. From 1985 to 1987, Mr. Patterson
was a financial analyst at Goldman, Sachs & Co., where he was involved in
structuring and arranging financing for leveraged buyouts and in privately
placing debt and equity securities. He also served as a director of Plum Creek
Timber Company, the largest private timberland owner in the United States,
from December 1992 to May 2003.  Mr. Patterson earned his M.B.A. in 1989 from
the Stanford Graduate School of Business and received his A.B. from Harvard
College in 1984. He is Board Chair of the California Academy of Sciences,
Chair of the Investment Committee of the Marin Community Foundation, Vice
Chair of the Stanford Business School Trust and a former trustee and board
president of the Bay Area Discovery Museum. Mr. Patterson is also a Henry
Crown Fellow of the Aspen Institute. In addition to serving as Chairman of the
Board, he is a member of the Nominating and Governance Committee.
    J. Stuart Ryan. Mr. Ryan has been the owner and President of Rydout LLC,
an investment firm focused on the energy sector, since February 2003. He also
has been a venture partner with SPO Partners & Co., a private investment
partnership, since 2003. SPO may initially hold more than 10 percent of the
Company's common stock and may be considered an affiliate of the Company. From
1986 through 2003, Mr. Ryan held various management positions with The AES
Corporation, a global power company, including Executive Vice President from
February 2000 and Chief Operating Officer from February 2002. He also served
as Chairman of the Board of Directors of Indianapolis Power & Light, and as a
director of AES Gener, a publicly listed company in Chile.  Mr. Ryan is a
graduate of the Harvard Business School and has a Chemical Engineering degree
from Lehigh University. He currently serves on Lehigh's Global Council and is
Chairman of its Asa Packer Society and is also a director of O&M Solutions, a
company based in Mauritius that provides technical services to companies
developing, constructing and operating power plants in Asia, the Middle East
and Africa. He serves on the Compensation Committee.
    Calpine Corporation is helping meet the needs of an economy that demands
more and cleaner sources of electricity. Founded in 1984, Calpine is a major
U.S. power company, currently capable of delivering nearly 24,000 megawatts of
clean, cost-effective, reliable, and fuel-efficient electricity to customers
and communities in 18 states in the U.S. The company owns, leases, and
operates low-carbon, natural gas-fired, and renewable geothermal power plants.
Using advanced technologies, Calpine generates electricity in a reliable and
environmentally responsible manner for the customers and communities it
serves. Please visit for more information.
    Forward Looking Statement
    In addition to historical information, this release contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. We use words such as "believe,"
"intend," "expect," "anticipate," "plan," "may," "will" and similar
expressions to identify forward-looking statements. Such statements include,
among others, those concerning our expected financial performance and
strategic and operational plans, as well as all assumptions, expectations,
predictions, intentions or beliefs about future events. You are cautioned that
any such forward-looking statements are not guarantees of future performance
and that a number of risks and uncertainties could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Such risks and uncertainties include, but are not limited to: (i) the risks
and uncertainties associated with the ability to successfully implement
Calpine's Plan of Reorganization as confirmed; (ii) our ability to implement
our business plan; (iii) financial results that may be volatile and may not
reflect historical trends; (iv) seasonal fluctuations of our results; (v)
potential volatility in earnings associated with fluctuations in prices for
commodities such as natural gas and power; (vi) our ability to manage
liquidity needs and comply with covenants related to our existing financing
obligations and anticipated exit financing; (vii) the direct or indirect
effects on our business of our impaired credit including increased cash
collateral requirements in connection with the use of commodity contracts;
(viii) transportation of natural gas and transmission of electricity; (ix) the
expiration or termination of our power purchase agreements and the related
results on revenues; (*) risks associated with the operation of power plants
including unscheduled outages; (xi) factors that impact the output of our
geothermal resources and generation facilities, including unusual or
unexpected steam field well and pipeline maintenance and variables associated
with the waste water injection projects that supply added water to the steam
reservoir; (xii) risks associated with power project development and
construction activities; (xiii) our ability to attract, retain and motivate
key employees; (xiv) our ability to attract and retain customers and contract
counterparties; (xv) competition; (xvi) risks associated with marketing and
selling power from plants in the evolving energy markets; (xvii) present and
possible future claims, litigation and enforcement actions; (xviii) effects of
the application of laws or regulations, including changes in laws or
regulations or the interpretation thereof; and (xix) other risks identified
from time-to-time in Calpine's reports and registration statements filed with
the SEC, including, without limitation, the risk factors identified in its
Annual Report on Form 10-K for the year ended December 31, 2006 and Quarterly
Reports on Form 10-Q. Actual results or developments may differ materially
from the expectations expressed or implied in the forward-looking statements
and Calpine undertakes no obligation to update any such statements. Unless
specified otherwise, all information set forth in this release is as of
today's date and Calpine undertakes no duty to update this information. For
additional information about Calpine's chapter 11 reorganization or general
business operations, please refer to Calpine's Annual Report on Form 10-K for
the fiscal year ended December 31, 2006, Calpine's Quarterly Reports on Form
10-Q, and any other recent Calpine report to the Securities and Exchange
Commission. These filings are available by visiting the Securities and
Exchange Commission's website at or Calpine's website at

For further information:

For further information: Media Relations, Mel Scott, +1-713-570-4553,, or Investor Relations, Norma Dunn, +1-713-830-8883,, both of Calpine Corporation Web Site:

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