Updated PG&E Bankruptcy Commitments Provide For Sale Process, If Chapter 11 Plan Not Confirmed
March 23,2020
PG&E Corporation and Pacific Gas and Electric Company (together, 'PG&E' or the 'company') announced that the company has filed a motion with the Bankruptcy Court outlining new commitments to its Plan of Reorganization ('Plan').
The State of California Governor’s Office has filed a statement in the Bankruptcy Court that is supportive of the company’s Plan and its compliance with Assembly Bill (AB) 1054.
Among other things, the new commitments include, "Agreeing that, in the unlikely event the Plan is not confirmed, or PG&E does not exit Chapter 11 in a timely manner, an orderly process for a sale of the business to the State or another party will be commenced."
PG&E’s Plan remains subject to approval by the California Public Utilities Commission and the Bankruptcy Court.
Other new commitments include:
• Supporting the CPUC’s enactment of measures to strengthen PG&E’s governance and operations, including enhanced regulatory oversight and enforcement that provides course-correction tools as well as stronger enforcement if it becomes necessary;
• Agreeing to host an observer to provide the State with insight into the company’s progress on safety goals before the company exits Chapter 11;
• A commitment not to reinstate a dividend for approximately 3 years, which is estimated to contribute an additional $4 billion of equity to pay down debt and invest in the business;
• Pursuing a rate-neutral $7.5 billion securitization transaction after PG&E emerges from Chapter 11, to reduce the cost of financing for customers and to accelerate payments to wildfire victims; and
• Committing not to seek recovery in customer rates of any portion of the approximately $25.5 billion that will be paid to victims of the 2017-2018 wildfires under the company’s plan when PG&E emerges from Chapter 11 (except through the rate-neutral securitization transaction).
PG&E also noted that another major milestone was achieved recently when the Bankruptcy Court approved commitment letters with respect to PG&E’s exit financing.
