PG&E Completes Initial Stage of Bankruptcy Exit Financing
June 21 2020 - 08:20PM
Business Wire
Reorganization Plan Debt Offering Saves
Customers Approximately $250 Million Annually
Following the formal confirmation of the company’s Plan of
Reorganization (“Plan of Reorganization”) by the United States
Bankruptcy Court yesterday, PG&E Corporation (the
“Corporation”) and Pacific Gas and Electric Company (the “Utility,”
together “PG&E”) announced today that PG&E has completed
the initial stage of its bankruptcy exit financing contemplated in
its Plan of Reorganization. As a result of its Chapter 11
proceedings, PG&E has been able to retire expensive high-coupon
debt and replace it with lower cost debt, yielding significant
annual savings for customers. These savings are estimated to be
approximately $250 million annually. PG&E will reflect these
savings in future customer bills later this year.
“The primary purpose of our Chapter 11 filings was to address
the billions of dollars in claims from victims of recent wildfires.
We’ve been able to reach agreements with individual victims, public
entities and others. This financing effort takes us one step closer
to compensating victims for their losses,” said Jason Wells, Chief
Financial Officer of PG&E.
“The Chapter 11 proceedings also allowed us to refinance our
debt which will result in real savings for customers starting this
year, after we emerge from Chapter 11, consistent with our
commitment to keep prices as low as possible for customers,” Wells
continued.
Details of Recent Capital Raise
On Tuesday, June 16, the Utility raised $8.925 billion of debt,
including approximately $3.5 billion of long-term debt to finance
capital investments. The remaining $2.4 billion of long-term debt
and $3 billion of 2-year debt will be used to fund a portion of
PG&E’s initial contribution to the AB 1054 wildfire fund and to
fund claims at emergence from Chapter 11. Interest expense for
these latter items will be paid by shareholders.
On Thursday, June 18, the Corporation priced its previously
announced debt raise of $4.75 billion, which is expected to close
on June 23, subject to customary closing conditions. The cost of
this debt will be borne by PG&E shareholders. PG&E
Corporation has committed to suspend its common dividend until it
has recognized $6.2 billion in non-GAAP core earnings, to support a
plan for capital investment or to reduce Corporation debt in the
coming years.
Beyond the savings for customers, the lower cost of
shareholder-funded debt of roughly $70 million compared to the
prior expectations will provide additional flexibility for the
company after emergence from Chapter 11.
PG&E’s Plan of Reorganization was confirmed by the
Bankruptcy Court on Saturday, June 20, 2020.
Forward-Looking Statements
This news 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 Pacific Gas and Electric Company, including but not
limited to, statements about Chapter 11 emergence, estimated annual
cost savings to customers, commitment regarding customer prices,
expected financing, planned use of proceeds and savings from the
lower cost of shareholder-funded debt, payment of interest expense,
and commitments and expectations, including timing, related to the
payment of any dividends, as well as additional governance,
operational and financial Plan of Reorganization commitments and
implementation of wildfire settlements. 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. 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
Pacific Gas and Electric Company’s joint annual report on Form 10-K
for the year ended December 31, 2019, their joint quarterly report
on Form 10-Q for the quarter ended March 31, 2020, and their
subsequent reports filed with the Securities and Exchange
Commission (the “SEC”), which are available on PG&E
Corporation’s website at www.pgecorp.com and on the SEC website at
www.sec.gov. Additional factors include, but are not limited to,
those associated with the Chapter 11 cases of PG&E Corporation
and Pacific Gas and Electric Company that commenced on January 29,
2019. PG&E Corporation and Pacific Gas and Electric Company
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.
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.
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