Pacific Gas and Electric to price $5.93 billion high-grade first mortgage bonds in six parts

By Cristal Cody

Tupelo, Miss., June 15 – Pacific Gas and Electric Co. is expected to price a $5,925,000,000 offering of first mortgage bonds (Baa3/BBB-/BBB-) in six tranches, according to a market source and a 424B5 filing with the Securities and Exchange Commission.

The deal includes floating-rate bonds due 2022 based on the Libor benchmark, as well as fixed-rate bonds due 2022, Aug. 1, 2027, Feb. 1, 2031, Aug. 1, 2040 and Aug. 1, 2050.

J.P. Morgan Securities, LLC, Barclays, BofA Securities, Inc., Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are the bookrunners.

Global fixed income investor calls were held on Monday and expected to continue on Wednesday.

Parent company PG&E Corp. intends to bring $3.75 billion of high-yield senior notes (B1/BB-/BB) in three tranches to the primary market on Friday.

In addition, the company intends to price a term loan, common stock and equity units as part of its reorganization funding from Chapter 11 bankruptcy following liability claims from the 2017 and 2018 northern California wildfires.

Proceeds from all the debt offerings will be held in escrow until the company emerges from bankruptcy.

The company filed bankruptcy on Jan. 29, 2019 in the U.S. Bankruptcy Court for the Northern District of California under Chapter 11 case number 19-30088.

The California Public Utilities Commission approved the plan of reorganization on May 28.

If Pacific Gas and Electric does not meet the escrow conditions on or before Sept. 9, 2020, the high-grade bonds are subject to a mandatory redemption at 101%.

The floating-rate notes are callable at par, while the 2022 bonds will have make-whole and par calls.

The 2027 bonds have a make-whole call before June 1, 2027 and par call thereafter.

The 2031 bonds have a make-whole call before Nov. 1, 2030 and par call thereafter.

The 2040 bonds have a make-whole call before Feb. 1, 2040 and par call thereafter.

Also, the 2050 bonds have a make-whole call before Feb. 1, 2050 and par call thereafter.

The electric and natural gas utility is based in San Francisco and plans to relocate its headquarters to Oakland, Calif., beginning in 2022.

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