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Bloomberg
PG&E Corp expects its looming bankruptcy to take about two years to resolve and has arranged $5.5 billion to fund its operations during the process. Its shares and bonds both gained.
Four banks agreed to provide debtor-in-possession fun-ding including a $3.5 billion revolving credit facility, the embattled California utility said in a filing. “It’s a pretty substantial amount of cash so it does look like they expect to stay in bankruptcy for some stretch,’’ said Kit Konolige, a senior analyst with Bloomberg Intelligence.
California’s biggest utility owner faces $30 billion in potential wildfire liabilities, and its bankruptcy plan has reverberated across the power industry. The state’s big utilities have seen their shares plunge since November’s deadly Camp Fire, and PG&E’s debt rating has been cut to junk status. The company’s electricity suppliers are getting downgraded amid concern that the utility may seek to renegotiate contracts, and five banks may be on the hook because they’re the buyers of last resort for more than $760 million of bonds.
The banks in the agreement are JPMorgan Chase & Co, Bank of America Corp, Barclays Plc and Citigroup Inc. JPMorgan will be hosting a lender call to syndicate the financing, according to a person with knowledge of the matter. The package also includes a $1.5 billion DIP term loan.
It may yield between 250 and 275 basis points above Libor with a price of 99.5 cents, the person said, asking not to be identified as the details are private.
PG&E previously sought protection from creditors in 2001 in a process that took about three years, after its Pacific Gas & Electric utility unit filed for bankruptcy.
That came amid an electricity crisis in the state that led to severe price spikes and rolling power outages.
Now, the utility must find a way sustain its operations and maintain a power grid that serves 16 million customers, while shielding itself from liabilities after fires devastated the state in 2017 and 2018, killing more than 100 people.