Another Jolt for Calpine

Good or bad, independent power producer Calpine (NYSE:CPN) seems to generate more than its share of headlines for a sub-$1 billion market-cap company. Tuesday's, though, could prove to be the biggest yet because the board of directors ousted the CEO (and founder) and the chief financial officer of this troubled company.

Using the oft-cited "new direction for the company" excuse, the board gave the heave-ho to Peter Cartwright and Robert Kelly. While director Ken Derr (formerly the CEO of Chevron (NYSE:CVX)) has been installed as the temporary CEO, the company's press release said that a new CEO will be chosen in the "very near future."

That's kind of interesting and suggests that this move was long in coming. After all, Calpine is a company with some pretty considerable needs and challenges. As such, I don't imagine that there's a tremendously long line of talented executives who want this job and are willing to possibly tarnish their reputation by being the last captain of record on a ship that's long since hit an iceberg.

Given that the official statement on the management changes was exceptionally terse, there's not much to do but speculate at this point. Certainly, Calpine has to make changes if it's going to survive, and it is not out of line to speculate as to whether the now-former CEO was an obstacle to more radical moves. Founders often have a much different view of their company than outside administrators do, and it's not impossible to think that he was opposed to considering drastic options like bankruptcy or the outright sale of the entire company.

Remember, this was a management team that only relatively recently acknowledged the need to sell off assets to pay down the substantial debt burden. What's more, this was a management team that had a pretty spotty track record of meeting liquidity and cash generation targets. But the final straw for the old management team seems to have been last week's court ruling that the company inappropriately used proceeds from asset sales.

I have no problem admitting that I'm clueless about Calpine's fate. Bankruptcy seems like a credible option, and I've got to think that bondholders' patience is wearing thin already. While I'm sure speculators will still flock to these shares in the hopes of a profitable trade, those looking to make investments in the space would do well to wait for a little clarity on Calpine's new direction and may instead want to take a look at the likes of NRGEnergy (NYSE:NRG) or Dynegy (NYSE:DYN) in the meantime.

Let our archives spark your interest:

• A Spark for Dynegy
• NRG's Tortured Earnings
• Here We Go Again at Calpine

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).