Calpine Corporation

Client

The United States Bankruptcy Court for the Southern District of New York appointed Bridge Associates LLC to serve as its Court-Appointed Expert appointed pursuant to FR §706 in re Calpine Corporation, et al.

Challenge

Bridge was asked to evaluate three sets of expert reports and rebuttal reports that presented widely divergent calculations of the Debtors’ Total Enterprise Value (“TEV”) submitted to the Court by Miller Buckfire & Co. LLC and PA Consulting Group (for the Debtors); Lazard Frères & Co. LLC and ICF International (for the Official Committee of Unsecured Creditors); and, by Perella Weinberg Partners and Altos Management Inc. (for the Official Committee of Equity Security Holders) (collectively the “Professionals”). These calculations of TEV ranged from a low of $11.9 billion to a high of $25.5 billion, a variance of $13.6 billion. Bridge was charged with recommending to the Court, based on its analysis of the data presented by these reports, a valuation upon which the Court could rely for Calpine’s TEV in connection with the confirmation of its Plan of Reorganization.

Solution

Bridge assembled an internal team, engaged MRW Associates, Inc as its energy expert, and Togut, Segal & Segal (“Togut”) as counsel to undertake the requisite corporate, legal and financial analysis. The team focused on assessing the reasonableness of the Professionals’ assumptions on the supply/demand and future prices of natural gas , the components which made up the Debtors’ estimates of its projected EBTIDA, the industry’s prospects and values of comparable companies in arriving at Bridge’s calculation of Calpine’s TEV. Simultaneously, Bridge entered into a process designed to offer the Parties the opportunity to resolve the differences in the values their experts had put forward.

Results

Bridge, acting as a catalyst, was able to assist the parties to reach a consensual resolution of their differences in opinion on Calpine’s TEV, resulting in an agreed upon TEV of $18.95 billion. Bridge also completed its own valuation work and was able to advise the Court that a valuation of Calpine at a TEV of $18.5 billion fit within its range of values derived from its analysis and that this figure was a reasonable number for valuing Calpine at emergence from bankruptcy. The Court confirmed the Debtors’ plan of reorganization using this value without objection.