PCG PG&E Corporation

By Katherine Blunt 

California Gov. Gavin Newsom on Friday dropped his opposition to PG&E Corp.'s plan to emerge from bankruptcy protection after striking a deal requiring certain concessions from the company.

As part of the deal, PG&E has agreed to put itself up for sale if it can't exit bankruptcy by June 30, a state-imposed deadline for its emergence if it wants to qualify for a state wildfire fund.

PG&E also agreed to use shareholder funding to reduce its debt load and submit to more stringent regulatory oversight that could lead to a state takeover of the company if it fails to make safety improvements.

The move clears one of the last major remaining hurdles for PG&E to exit Chapter 11. The company sought bankruptcy protection last year due to billions in potential liabilities from wildfires sparked by its equipment. The company disclosed the details of the agreement in a bankruptcy court filing.

"Because of these new tools, the state will have the legal authority to continue demanding total transformation even after the company emerges from bankruptcy," Mr. Newsom said in a statement. "We aren't taking our foot off the gas."

The Democratic governor had for months opposed PG&E's reorganization plan, which proposes raising billions of dollars in debt and equity to pay damages tied to a series of deadly wildfires throughout its service territory. He raised concerns that the plan would leave the company too leveraged to make safety investments in the electric grid and failed to ensure operational change within its leadership.

As part of the deal, PG&E has agreed to submit to an "operational observer" selected by the state to monitor its safety compliance. The company earlier this year agreed to replace many of its current directors and expand safety positions and performance metrics after it emerged from bankruptcy protection.

Write to Katherine Blunt at Katherine.Blunt@wsj.com

(END) Dow Jones Newswires

March 20, 2020 18:02 ET (22:02 GMT)

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