PG&E to use underwritten stock offerings as part of emergence funding

By Caroline Salls

Pittsburgh, June 8 – PG&E Corp. expects to pursue underwritten public offerings of common stock and equity units as part of its plan to fund its emergence from Chapter 11, subject to market conditions, with an expected $5.75 billion of gross proceeds from the offerings to be used, together with $3.25 billion of proceeds from private sales of common stock, to fund plan of reorganization distributions, according to a news release.

PG&E said the equity units are expected to consist of two components, including a prepaid forward purchase contract to purchase common stock and an undivided beneficial interest in specified U.S. treasury securities.

Under a reserved allocation, up to $1.25 billion of the common stock offering will be reserved for investors who are beneficial owners of at least 1 million shares of PG&E common stock as of 5 p.m. ET on June 19. Under a retail allocation, up to 25% of the common stock offering will be allocated to individual investors.

The company said the terms and conditions of the purchases by any investors participating in the reserved allocation will be the same as any other person in the general offering to the public, including the purchase price, except that the underwriters will reserve up to $1.25 billion of shares to be offered in the common stock offering for purchase by prospective participants in the reserved allocation.

There will be no obligation for any investor to participate in the reserved allocation.

For investors that elect to participate, shares from the reserved allocation will be allocated among confirmed eligible investors up to a maximum of $1.25 billion of shares to be offered in the offering. These investors may elect to purchase additional shares in the offering through the ordinary course offering process.

However, for tax purposes, PG&E said no shareholder will be allocated a number of shares, or be permitted to purchase a number of additional shares through the ordinary course offering process, that would result in that shareholder holding 4.75% or more of the company’s common stock.

In addition, PG&E said it currently expects that up to 25% of the common stock offering will be allocated to individual retail investors through brokerage firms. Each brokerage firm may have eligibility requirements and procedures that must be satisfied in order to have an opportunity to participate in the offering.

Any shares not allocated as part of the retail allocation are expected to be allocated as part of the general allocation process for the common stock offering.

The electric and natural gas utility is based in San Francisco. 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.

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