California-based power company Calpine said late on Tuesday it had filed for bankruptcy to better restructure its power plants and facilities in the US, Canada and Mexico, under Chapter 11 of the US bankruptcy code.
Calpine said in a statement that it has received commitments for up to US$2 billion of secured debtor-in-possession financing from Deutsche Bank and Credit Suisse First Boston to carry out its restructuring program.
The company also said certain of its direct and indirect subsidiaries and affiliates in Canada intended to file for creditor protection under the Companies' Creditors Arrangement Act.
"Chapter 11 protection will provide us with the ability to address our financial challenges without disrupting our ability to continue to provide reliable power supplies to the markets in which we operate," Calpine's chief executive officer Robert May said in a statement.
"We intend to move through this restructuring process as quickly as possible to regain our financial health and to take the necessary steps to become a stronger and more competitive energy provider," he added.
"Although the company has taken numerous steps to reduce its debt and strengthen its balance sheet through asset sales and other means, these actions were not sufficient to offset the cost of Calpine's substantial debt obligations," May said.
Calpine said that it has asked the bankruptcy court to allow it to continue paying employee wages and salaries and to reject certain of its contracts in which the price paid to Calpine for electricity is significantly below its cost or market prices.
Founded in 1984, San Jose-based Calpine Corp supplies customers and communities in 21 US states and three Canadian provinces with electricity from clean, efficient, natural gas-fired and geothermal power plants.
The company is burdened with a debt of more than US$17 billion, which it accumulated during its bid to become the top power provider in the US -- its current output is of some 28,000 megawatts.
It runs about 90 power stations in the US, Canada and Mexico, and employs some 3,000 people.
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