PG&E, ad hoc noteholder group reach agreement on reorganization plan

By Wendy Van Sickle

Columbus, Ohio, Jan. 22 – PG&E Corp. and Pacific Gas and Electric Co. said they have reached an with all claim holders who executed commitment letters in support of the alternative Chapter 11 plan of reorganization filed by the ad hoc committee of senior unsecured noteholders.

The utilities announced the agreement in a news release on Wednesday evening.

The ad hoc noteholder committee will withdraw its alternative plan of reorganization and support the PG&E plan upon entry of an order approving the restructuring support agreement (RSA) by the U.S. Bankruptcy Court for the Northern District of California, according to the release.

The agreement resolves all issues related to the treatment of pre-petition funded debt of the utility, including post-petition interest amounts and make-whole premiums, under PG&E’s Chapter 11 plan of reorganization.

“Reaching a resolution with the bondholder group is a positive development to move forward with our plan of reorganization,” PG&E chief executive officer and president Bill Johnson said in the release.

“This agreement helps achieve our goals of fairly compensating wildfire victims, protecting customers’ bills and emerging from Chapter 11 as the utility of the future that our customers and communities expect and deserve.”

“Over the last several months, we made significant progress in our Chapter 11 cases. We have settled with all pre-petition wildfire victims’ groups — individuals, insurance companies and public entities — and we’ve now reached an agreement with the bondholder group.

“We remain focused on working with key stakeholders, including elected officials and our state regulator, on how PG&E will look, act, and be held accountable as we emerge from Chapter 11.”

PG&E said it and the consenting noteholders have agreed to the treatment of all pre-petition funded debt under the PG&E plan through a combination of:

• New notes to be issued by the utility in satisfaction of existing high-coupon, long-dated senior notes, senior notes with near-term maturities and funded bank debt, including revolving loans, term loans, and the pollution control bonds);

• Reinstatement of all other senior notes; and

• Customary debt placement fees and reimbursements.

The new notes to be issued under the PG&E plan will save the company’s customers approximately $1 billion, PG&E said.

The utility said savings will be achieved by replacing high-coupon, long term notes with newly issued, lower cost debt, reducing the weighted average coupon of PG&E’s debt, consistent with the guidance given to the California Public Utilities Commission in PG&E’s cost of capital proceedings.

The pre-petition debt addressed by the settlement represents PG&E’s normal course borrowings for infrastructure investments, among other things, financed through the capital markets before it filed for Chapter 11.

The agreement is subject to a number of conditions, including that the debt to be issued by the utility has an investment grade rating at emergence from Chapter 11, and is to be implemented pursuant to the PG&E plan, which is subject to confirmation by the bankruptcy court.

The agreement is also subject to, among other things, the holders of at least two-thirds of the principal amount of each class of notes being refinanced signing the agreement by Jan.28.

PG&E said it expects to amend its plan of reorganization in the coming weeks.

PG&E is an electric and natural gas utility based in San Francisco. The company filed bankruptcy on Jan. 29, 2019 under Chapter 11 case number 19-30088.

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