Ad Hoc Noteholder Committee to Support
PG&E’s Plan of Reorganization
PG&E Corporation and Pacific Gas and Electric Company (the
“Utility”; together, “PG&E”) have reached an agreement with all
claim holders (the “Consenting Noteholders”) who executed
commitment letters in support of the alternative Chapter 11 Plan of
Reorganization filed by the Ad Hoc Committee of Senior Unsecured
Noteholders (the “Ad Hoc Noteholder Committee”) in PG&E’s
Chapter 11 cases.
The Ad Hoc Noteholder Committee will withdraw its Alternative
Plan of Reorganization and support the PG&E Plan upon entry of
an order approving the Restructuring Support Agreement (RSA) by the
Bankruptcy Court.
The agreement resolves all issues related to the treatment of
pre-petition funded debt of the Utility, including post-petition
interest amounts and make-whole premiums, under PG&E’s Chapter
11 Plan of Reorganization (the “PG&E Plan”).
“Reaching a resolution with the bondholder group is a positive
development to move forward with our Plan of Reorganization. This
agreement helps achieve our goals of fairly compensating wildfire
victims, protecting customers’ bills and emerging from Chapter 11
as the utility of the future that our customers and communities
expect and deserve,” said CEO and President of PG&E Corporation
Bill Johnson.
“Over the last several months, we made significant progress in
our Chapter 11 cases. We have settled with all pre-petition
wildfire victims’ groups—individuals, insurance companies and
public entities—and we’ve now reached an agreement with the
bondholder group. We remain focused on working with key
stakeholders, including elected officials and our state regulator,
on how PG&E will look, act, and be held accountable as we
emerge from Chapter 11,” said Johnson.
PG&E and the Consenting Noteholders have agreed to the
treatment of all pre-petition Utility funded debt under the
PG&E Plan through a combination of:
- New notes to be issued by the Utility in satisfaction of
existing high-coupon, long-dated senior notes, senior notes with
near-term maturities, and funded bank debt (including revolving
loans, term loans, and the pollution control bonds);
- Reinstatement of all other senior notes; and
- Customary debt placement fees and reimbursements.
The new notes to be issued under the PG&E Plan will save the
company’s customers approximately $1 billion.
Savings are achieved by replacing high-coupon, long term notes
with newly issued, lower cost debt. This will reduce the weighted
average coupon of PG&E’s debt, consistent with the guidance
given to the California Public Utilities Commission (CPUC) in
PG&E’s cost of capital proceedings. Further, customers will
have certainty with respect to financing costs without paying
hedging fees. The pre-petition debt addressed by the settlement
represents PG&E’s normal course borrowings for infrastructure
investments, among other things, financed through the capital
markets before it filed for Chapter 11.
The agreement is subject to a number of conditions, including
that the debt to be issued by the Utility have an investment grade
rating at emergence from Chapter 11, and is to be implemented
pursuant to the PG&E Plan, which is subject to confirmation by
the Bankruptcy Court in accordance with the provisions of the
Bankruptcy Code. The agreement is also subject to, among other
things, the holders of at least two-thirds of the principal amount
of each class of notes being refinanced signing the agreement by
January 28, 2020.
Bankruptcy Court approval of the agreement would be yet another
important step to put PG&E on a sustainable path forward to
resolve the Chapter 11 cases by the June 30, 2020 deadline to
participate in the State of California's go-forward wildfire fund
established by Assembly Bill (AB) 1054.
The agreement follows previous settlements with the Official
Committee of Tort Claimants and major groups of wildfire victims.
PG&E has reached agreements with all pre-petition wildfire
victims’ groups—individuals, insurance companies and public
entities. These include:
- A settlement valued at approximately $13.5 billion to resolve
all remaining wildfire claims, including individual claims,
relating to the 2015 Butte Fire, the 2017 Northern California
Wildfires (including the 2017 Tubbs Fire), and the 2018 Camp Fire
pursuant to the terms of the PG&E Plan. The PG&E Plan has
the support of the Official Committee of Tort Claimants and firms
representing approximately 70 percent of all individual wildfire
victims.
- Settlements with two major groups of wildfire claims holders,
including a $1 billion settlement with cities, counties, and other
public entities, and an $11 billion agreement with insurance
companies and other entities that have already paid insurance
coverage for claims relating to the 2017 and 2018 Northern
California wildfires.
Overview of the PG&E Plan
The PG&E Plan would accomplish the following:
- Position the company to attract low cost capital in support of
its wildfire mitigation plan;
- Put PG&E on a path to help the state meet its clean energy
goals and become the company that customers and communities expect
and deserve;
- Compensate wildfire victims from a trust funded for their
benefit in the amount of approximately $13.5 billion in accordance
with the terms of the Tort Claimants RSA;
- Compensate insurance subrogation claimants from a trust funded
for their benefit in the amount of $11 billion in accordance with
the terms of the Subrogation Claims Settlement and RSA;
- Pay $1 billion in full settlement of the claims of certain
public entities like cities and counties relating to the wildfires,
as previously announced;
- Satisfy in full all pre-petition funded debt obligations, all
pre-petition trade claims and all prepetition employee-related
claims;
- Assume all power purchase agreements and community choice
aggregation servicing agreements;
- Assume all pension obligations, other employee obligations, and
collective bargaining agreements with labor; and
- Provide for funding PG&E’s future participation in the
state wildfire fund established by AB 1054.
PG&E is committed to working with all stakeholders to
confirm and implement the PG&E Plan, to obtaining regulatory
approval from the CPUC consistent with AB 1054, and to achieving
confirmation of the Plan by the Bankruptcy Court in advance of June
30, 2020.
PG&E expects to amend its Plan of Reorganization in the
coming weeks.
Public Dissemination of Certain Information
A copy of the RSA has been posted on PG&E Corporation
website under the “Chapter 11” tab at the following address:
http://investor.pgecorp.com/Chapter-11/default.aspx.
PG&E Corporation and Pacific Gas and Electric Company (the
“Utility”) routinely provide links to the Utility’s principal
regulatory proceedings with the California Public Utilities
Commission and the Federal Energy Regulatory Commission at
http://investor.pgecorp.com, under the “Regulatory Filings” tab, so
that such filings are available to investors upon filing with the
relevant agency. PG&E Corporation and the Utility also
routinely post, or provide direct links to, presentations,
documents, and other information that may be of interest to
investors at investor.pgecorp.com, under the “Chapter 11,”
“Wildfire Updates” and “News & Events: Events &
Presentations” tabs, respectively, in order to publicly disseminate
such information. It is possible that any of these filings or
information included therein could be deemed to be material
information.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company
headquartered in San Francisco. It is the parent company of Pacific
Gas and Electric Company, an energy company that serves 16 million
Californians across a 70,000-square-mile service area in Northern
and Central California. Each of PG&E Corporation and the
Utility is a separate entity, with distinct creditors and
claimants, and is subject to separate laws, rules and regulations.
For more information, visit pgecorp.com.
Forward-Looking Statements
This press release includes forward-looking statements that are
not historical facts, including statements about the beliefs,
expectations, estimates, future plans and strategies of PG&E
Corporation and the Utility, including but not limited to their
bankruptcy emergence plan. These statements are based on current
expectations and assumptions, which management believes are
reasonable, and on information currently available to management,
but are necessarily subject to various risks and uncertainties,
including the possibility that the conditions to confirmation of or
emergence in the Amended Plan will not be satisfied. In addition to
the risk that these assumptions prove to be inaccurate, factors
that could cause actual results to differ materially from those
contemplated by the forward-looking statements include factors
disclosed in PG&E Corporation and the Utility’s joint Annual
Report on Form 10-K for the year ended December 31, 2018, their
joint Quarterly Reports on Form 10-Q for the quarters ended March
31, 2019, June 30, 2019 and September 30, 2019, and their
subsequent reports filed with the Securities and Exchange
Commission. Additional factors include, but are not limited to,
those associated with PG&E Corporation’s and the Utility’s
Chapter 11 Cases. PG&E Corporation and the Utility undertake no
obligation to publicly update or revise any forward-looking
statements, whether due to new information, future events or
otherwise, except to the extent required by law.
No Securities Offering
This is not an offering of securities and securities may not be
offered or sold absent registration or an applicable exemption from
the registration requirements.
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