PG&E set to float $31bn bankruptcy restructuring plan

Bloomberg

PG&E Corp. has been shopping a new plan that would see the bankrupt California utility em-erge from bankruptcy in March with a $14 billion fund established to address past wildfire claims and another $20 billion statewide fund for future fires. The proposal, the first one that PG&E has made, is expected to be filed in August, according
to a document reviewed by Bloomberg. It also contemplates refinancing about $11 billion in debt and accrued interest.
The plan would help establish a new statewide fund for future wildfire claims by rolling over about $14 billion of California of Department of Water Resources bonds, $3 billion in contributions from PG&E and another $3 billion from other utilities, according to the document.
“We are looking at all options when it comes to working with the governor and legislature, and are committed to resolving wildfire victims’ claims fairly and expeditiously, mitigating wildfire risks, continuing to deliver safe and reliable energy to our customers, and supporting the state’s bold clean energy goals,” PG&E said in an emailed statement.
The package, valued at about $31 billion, would be funded by $15 billion of securitisations, the issuance of $14 billion in debt and $2 billion in insurance proceeds. The plan, which doesn’t contemplate new equity being contributed, would require legislation to implement the wildfire fund and to determine the size and structure of the securitisations.
Shares of PG&E jumped as much as 6.9 percent on the news, reversing earlier losses before shares were briefly halted. The shares were last trading at $24 in New York.
A $10 billion securitisation would be established by redirecting a portion of the company’s net earnings over several years. Another $5 billion securitisation would be established via $500 million in various cost cuts, including asset sales, management reductions and office closures.
The news comes as California Governor Gavin Newsom is pre-ssing lawmakers on a wildfire fund that may be financed thr-ough bonds to help utilities pay for fire damage caused by their power lines, according to people familiar with the proposal.
PG&E’s proposal is an alternative to a $47.5 billion restructuring plan being developed by an ad hoc committee of the company’s senior creditors led by Pacific Investment Management Co., Elliott Management Corp. and Davidson Kempner Management.