Calpine climbs; New Century in tailspin; Doral drifts up; market sees DoubleClick returning public

By Ronda Fears

Memphis, March 28 - Bankrupt independent power producer Calpine Corp. has offers on the table for its significant power production assets from financial and corporate bidders, including at least one bid for the entire company, and the identity of the bidders should be aired by May in order for the company to meet its June deadline to file a reorganization plan, traders said Wednesday.

Rumors of strong interest from potential sponsors of an equity rights offering for the Calpine plan has propelled the stock for months, according to traders. The shares zoomed up by 17% on Wednesday.

Separately, bankrupt air carrier Delta Air Lines Inc. shares continued to get dumped, however, and several other names considered to be on the brink of bankruptcy were widely mixed.

New Century Financial Corp. took another sharp dive while Bally Total Fitness Holding Corp. was steady and Doral Financial Corp. saw a bounce. New Century (Pink Sheets: NEWC) fell 30 cents, or 21.28%, to close at $1.11. Bally (NYSE: BFT) was unchanged at 73 cents.

Tribune Co. was trading "in limbo," as one trader put it, with one report saying Tribune is likely to accept real estate mogul Sam Zell's $8 billion buyout offer while another put billionaires Ron Burkle and Eli Broad in renewed buyout talks with Tribune and considering a counter offer. Meanwhile, a federal judge temporarily blocked Tribune's sale of The Advocate newspaper in Stamford, Conn., to Gannett Co. on Wednesday, citing pending union arbitration.

The stock (NYSE: TRB) added 3 cents to $31.13 amid light volume with 1.34 million shares traded versus the norm of 1.47 million shares.

"When the Chandlers [controlling Tribune stockholders] asked for this company to be put up for sale, the share price was $34 and they believed that Tribune was worth much more. Now Zell is buying it for $33," the trader said.

"Whoever gets this company is essentially stealing it. I'm surprised the Chandlers are letting this bid go through. Management seems more concerned about saving their jobs. That is why they are leaning toward Zell's bid as opposed to the Burkle/Broad bid."

Players also were having difficulty in figuring out a way to play a report in the Wall Street Journal that online advertising company DoubleClick Inc. is in talks with potential suitors about a sale, according to one trader, who said many expect that when the talks shake out, DoubleClick will become a public company again.

DoubleClick was taken private by San Francisco private equity firm Hellman & Friedman in a $1.1 billion buyout in 2005. Hellman is now seeking at least $2 billion for the company, according to the report, and is talking with Microsoft Corp. Talks also include Google Inc. and IAC/Interactive Corp., according to the trader. The company has engaged Morgan Stanley to assist it in exploring strategic options, including a possible stock market listing.

"There wasn't a lot of activity in any of the so-called DoubleClick suitors; maybe it was a pretty decent showing on IAC but the stock was lower," the trader said.

"I think people think it's more likely that they will bring DoubleClick back as a public company."

Calpine climbs on buy-ins

Heavy buy-ins pushed Calpine sharply higher Wednesday, according to a trader, who said reports confirming market rumors gave rise to thinking that there might be some distribution in the bankruptcy to current equity holders.

Calpine (Pink Sheets: CPNLQ) gained 30 cents on the day, or 16.85%, to close Wednesday at $2.08 after flirting with setting a new 52-week high. The stock hit $2.12 during the session, which was pat with the high set March 15.

"There was a Reuters report that mentions the buyer by name, AES Corp., with backing from the Carlyle Group - we've heard that before, but it is just gaining steam," the trader said.

"Maybe all this is good for is to force short sellers to close out their position as, at least for now, there is a chance that some other outcome besides total cancellation of shares could occur. I suspect a good number of the short shares are the ones the company itself put out on the debentures; that is the only explanation, as the short amount decreased nearly precisely along with the outstanding shares number."

The trader said about 36.5% of the float is short.

Earlier this month, Calpine got court approval to hire Miller Buckfire and begin the process of trying to find a buyer for the company or sponsor for an equity rights offering. Since Calpine filed for bankruptcy, the company has sold numerous assets as part of a plan to sell about 20 power plants, or about one-fifth of its total fleet.

The company aims to emerge bankruptcy focused in the California and Texas electricity markets. Calpine is based in San Jose, Calif.

Some light on the bidding process should be shed in early May, as Calpine is scheduled to present its reorganization plan on June 20, the trader said.

Carlyle and AES declined to comment on the speculation.

Calpine received court approval earlier this month for a new, upsized $5 billion debtor-in-possession credit facility that can be expanded to $7 billion and can be rolled over to as exit financing.

Doral swap off the table

Puerto Rico-based Doral Financial has been trying for months now to refinance a $625 million floating-rate note coming due in July, and, according to a market source on Wednesday, a debt-for-equity swap being discussed as one option in the process has been "taken off the table."

Doral shares were on the rise, which a stock trader said was in part due to that rumor as well as ongoing speculation of a buyout.

Doral (NYSE: DRL) added 5 cents on the day, or 2.76%, to close at $1.86 amid light volume.

The stock trader said there continues to be speculation that Doral is in discussion about a buyout, following news last week that the company sold 11 branches in New York to New York Community Bancorp Inc., the holding company for New York Community Bank and New York Commercial Bank.

"There are some guys who think the bondholders are just going to take the company for a little bit of cash" in addition to the $625 million owed them for the bonds, the stock trader said. "With the sale of the [New York] branches, the idea that there could be interested buyers was rekindled."

There have been rumors for months of negotiations with bondholders involving a debt-for-equity swap to take out the debt. Talks also have included some level of cash payment, most recently in the neighborhood of about $275 million, according to market sources. The value of the equity involved has been a major sticking point, sources have said, as bondholders want to mark the stock at $1 a share or less.

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