Pacific Gas and Electric (NYSE:PCG)
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3 Months : From Sep 2019 to Dec 2019
By Peg Brickley and Katherine Blunt
Bondholders are taking another run at PG&E Corp., forming an alliance with victims of the wildfires that swept through California in 2017 and 2018 to chart a path out of bankruptcy for the state's largest utility.
Court papers filed by a group of PG&E bondholders, including Elliott Management Corp. and by the official committee representing fire victims, asked for the green light to put a chapter 11 plan on the table that would compete with the company's own restructuring framework.
PG&E has proposed a chapter 11 plan that would cap the amount owed to wildfire victims at about $8.4 billion, and pays insurers and the people who invested in insurance claims stemming from the fires $11 billion.
The company wasn't immediately able to comment.
Bondholders have offered improved treatment for victims, who are gearing up for high-stakes battles with PG&E to prove the amount of their claims. Court papers say bondholders put the total value of wildfire claims, including insurance, at $24 billion.
Bondholders must get court permission to formally file a competing chapter 11 plan, but the announcement of an alternative to the company's version of how to pay its fire damage claims puts pressure on PG&E to come up with a workable deal.
Judge Dennis Montali rebuffed an earlier effort by Elliott-led bondholders to control the terms under which PG&E would cover fire damage claims, leaving the company's fate in its own hands.
Shareholders and other critics faulted the bondholder's initial proposal as an effort to seize control of PG&E in bankruptcy and collect hundreds of millions of dollars of fees along the way.
The proposed chapter 11 plan outlined Thursday on the docket of the U.S. Bankruptcy Court in San Francisco could be even more advantageous to bondholders, and damaging to shareholders, than the first version.
PG&E has said bondholders would be paid in full under its chapter 11 plan and thus have no right to vote on the terms. Bondholders disagreed Thursday, saying they were being cheated of their contract rate of interest as well as premiums they say are due on the debt.
They said PG&E can't raise the money it needs to fund its chapter 11 exit plan from other sources, including $14 billion in new equity that would come from existing shareholders. PG&E's plan would dilute shareholders' interests, but it has the support of major equity owners that have committed to putting new money behind the company.
Bondholders said they can offer $28.4 billion in new money for about 59% of the reorganized PG&E. The rest of the equity in the postbankruptcy company would be put into the trust that would absorb wildfire claims.
An official committee of wildfire victims declined to comment. Its lawyers have scored some crucial victories against PG&E in bankruptcy court, winning the right to put some of the fire claims before juries for decision.
PG&E filed for bankruptcy at the end of January, a move that allowed it to avoid facing juries in communities hurt by fires linked to its equipment.
Write to Peg Brickley at email@example.com and Katherine Blunt at Katherine.Blunt@wsj.com
(END) Dow Jones Newswires
September 19, 2019 19:22 ET (23:22 GMT)
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