PG&E announces changes to plan equity backstop commitment agreements

By Caroline Salls

Pittsburgh, March 10 – PG&E Corp. entered into agreements with parties representing all $12 billion of the equity backstop agreements contained in its plan of reorganization to modify the terms of the backstop commitment letters, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The amendments extend the deadline for obtaining approval of the commitment letters from the U.S. Bankruptcy Court for the Northern District of California to March 31.

The amendments also allow the PG&E debtors to implement the capital structure filed with the California Public Utilities Commission so that the amount of the new equity financing component of the capital structure would be $9 billion and the capital structure will be deemed to include a $6 billion tax benefits monetization transaction.

In addition, the backstop commitment premium was changed to a fixed number of shares in circumstances when the premium is paid in shares of common stock, with each backstop party receiving its share of 119 million shares.

The 119 million share amount will be adjusted through the issuance of additional shares if the total value of the 119 million shares paid as a backstop commitment premium is less than $764 million based on the market price of PG&E’s common stock following the plan effective date, subject to a cap of 19,909,091 additional shares.

The PG&E debtors also included projected financial statements as part of Tuesday’s 8-K.

Under those projections, the debtors’ operating income is expected to be $3.261 billion in 2020, $1.763 billion in 2021, $4.515 billion in 2022, $4.97 billion in 2023 and $5.405 billion in 2024.

Net operating revenue for 2020 is projected to be $15.512 billion, as well as $15.408 billion in 2021, $16.866 billion in 2022, $18.256 billion in 2023 and $19.028 billion in 2024.

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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