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PG&E Completes Initial Stage of Bankruptcy Exit Financing

Following the formal confirmation of the company's Plan of Reorganization ("Plan of Reorganization") by the United States Bankruptcy Court yesterday, PG&E Corporation (NYSE: PCG) and Pacific Gas and Electric Company (the "Utility," toge

Benzinga · -
Following the formal confirmation of the company's Plan of Reorganization ("Plan of Reorganization") by the United States Bankruptcy Court yesterday, PG&E Corporation (NYSE: PCG) 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.