Harbinger pushes Calpine to negotiate with NRG Energy

By Lisa Kerner

Charlotte, N.C., May 21 - Calpine Corp. shareholder Harbinger Capital Partners Funds believes the company should discuss with NRG Energy, Inc. the terms of its recent offer to acquire Calpine, calling the offer a "good starting point."

"We have yet to identify anything objectionable about the offer that cannot be resolved through negotiation," Harbinger said in a May 21 letter to Calpine's board of directors.

According to Harbinger, the timing of NRG's offer is "excellent for Calpine" because the company has not yet settled on a strategic view or chief executive officer.

The investor called Calpine's current situation "untenable," noting that the San Jose, Calif., power company is basically run by a consultant and a part-time chief financial officer.

Harbinger urged the board to make the full terms of the offer public so its shareholders can weigh in.

Calpine confirmed late Wednesday that NRG's proposal included an all-stock merger transaction at a fixed exchange ratio of 0.534, which implies a premium of 6.7% based on the closing prices of both companies' stocks as May 21, a company statement said.

The company's board will continued to review the proposal and no action is needed from Calpine shareholders at this time, the Calpine news release stated.

Calpine is being advised by Goldman, Sachs & Co. and Skadden, Arps, Slate, Meagher & Flom LLP.

Princeton, N.J.-based NRG confirmed it made an offer on May 14, and said it had asked Calpine to consider what it believes to be a "compelling proposition for all constituencies" and one that would "create the definitive competitive power generation company."

Based on May 13 closing prices, it said the offer of 0.534 NRG shares per Calpine share represents $23.00 per share, a 16% premium to the May 13 close and 20% over the 30-day trading average.

NRG also said that it believe the merger would answer Calpine's concern about realizing the upside potential in its stock.

Harbinger, with a 24% stake in Calpine, also said it is not interested in influencing Calpine's operations or in acquiring the company.

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