Item 7.01 Regulation FD Disclosure
As previously disclosed, on January 29, 2019 (the “Petition Date”), the Debtors filed voluntary petitions for relief under chapter 11 of title 11 (“Chapter 11”) of the United States Code in the U.S. Bankruptcy Court for the Northern District of California (the “Bankruptcy Court”). The Debtors’ Chapter 11 cases are being jointly administered under the caption In re: PG&E Corporation and Pacific Gas and Electric Company, Case No. 19-30088 (DM) (the “Chapter 11 Cases”). On January 31, 2020, the Debtors filed a Joint Chapter 11 Plan of Reorganization dated January 31, 2020 (the “Proposed Plan”).
Preliminary Financial Data and Financial Projections
In connection with the Debtors’ Chapter 11 Cases, the Debtors entered into confidential discussions with, and provided certain confidential information regarding the Debtors to, certain holders of debt and equity securities of the Debtors, official and certain ad hoc committees and with certain parties to the California Public Utility Commission’s Order Instituting Investigation into the Proposed Plan, which parties received such information on a confidential basis. In connection with those discussions, the Debtors agreed to provide such information publicly and are making the disclosures included in this Item 7.01, including Exhibit 99.3 to this report, in accordance with that agreement. As part of those discussions, the Debtors’ advisors disclosed certain projections. These projections were only intended to provide illustrative relative value based on assumptions of the Debtors’ advisors. These projections should not be construed as having been provided by the Debtors. The projections do not constitute a proposal, term sheet or offer by the Debtors in connection with the Debtors’ discussion with the Investors. The Debtors also attached certain projections filed with the Bankruptcy Court on February 18, 2020 as an exhibit to their previously filed disclosure statement filed pursuant to section 1125 of the Bankruptcy Code. These projections are included on Exhibit 99.4 to this Form 8-K.
The information in Exhibits 99.3 and 99.4 includes certain unaudited financial data that is preliminary and may change, as well as certain financial projections for the fiscal years ending December 31, 2020 through December 31, 2024. While presented with numerical specificity, the financial projections are approximations based upon a variety of estimates and assumptions subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the Debtors’ control. Actual results may vary materially from those presented. The financial projections also include certain assumptions related to common and preferred dividends, which are preliminary and subject to change. The financial projections have not been audited and are not presented in accordance with generally accepted accounting principles (“GAAP”). The Debtors believe that the financial projections have been prepared on a reasonable basis, reflecting best estimates and assumptions. However, because this information is highly subjective, it should not be relied on as indicative of future results. The Debtors do not undertake any obligation to publicly update the projections to reflect circumstances existing after the date when the projections were made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the projections are shown to be in error. As a result of the foregoing considerations and other limitations, including those described below under “Forward-Looking Statements,” you are cautioned not to place undue reliance on the financial data included in this Item 7.01, including Exhibits 99.3 and 99.4.
The information in this Item 7.01, including Exhibits 99.3 and 99.4, is being furnished and shall not be deemed “filed” for purposes of section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in filings under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Non-GAAP Measures
The information in Exhibits 99.2, 99.3 and 99.4 include certain financial measures that are not prepared in accordance with GAAP, including “non-GAAP core earnings” and “non-GAAP core EPS,” in order to provide measures that allow investors to compare the underlying financial performance of the business from one period to another, exclusive of non-core items. “Non-GAAP core earnings” is a non-GAAP financial measure and is calculated as income available for common shareholders less non-core items. “Non-core items” include items that the management of the Debtors does not consider representative of
ongoing earnings and affect comparability of financial results between periods. “Non-GAAP core EPS,” also referred to as “non-GAAP core earnings per share,” is a non-GAAP financial measure and is calculated as non-GAAP earnings from operations divided by common shares outstanding (diluted). The Debtors use non-GAAP core earnings and non-GAAP core EPS to understand and compare operating results across reporting periods for various purposes including internal budgeting and forecasting, short- and long-term operating planning, and employee incentive compensation. The Debtors believe that non-GAAP core earnings and non-GAAP core EPS provide additional insight into the underlying trends of the business, allowing for a better comparison against historical results and expectations for future performance.
Because Non-GAAP core earnings and non-GAAP core EPS are not measurements determined in accordance with GAAP and are susceptible to varying calculations, such measures may not be comparable to other similarly titled measures presented by other companies. Non-GAAP core earnings and non-GAAP core EPS are not substitutes or alternatives for GAAP measures such as consolidated income available for common shareholders.
Exhibits
The information included in the Exhibits to this report is incorporated by reference in response to this Item 7.01, is being “furnished” and shall not be deemed to be “filed” for purposes of section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act.
Public Dissemination of Certain Information
PG&E Corporation and the Utility routinely provide links to the Utility’s principal regulatory proceedings before the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC) 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 http://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. The information contained on such website is not part of this or any other report that PG&E Corporation or the Utility files with, or furnishes to, the Securities and Exchange Commission.