PG&E trims junk notes to $2 billion, sets talk in revised dual-tranche offering; pricing Thursday

By Paul A. Harris

Portland, Ore., June 18 – PG&E Corp. downsized its public offering of senior secured notes (B1/BB-/BB) to $2 billion from $3.75 billion, shifting $1.75 billion of proceeds to its term loan, market sources said on Thursday.

The notes offering underwent a revision which saw a proposed tranche of five-year notes withdrawn from the market.

Of the remaining two tranches, $1 billion of eight-year notes, non-callable for three years, is talked to yield 5% to 5¼%, deep inside of initial guidance of 5¾% to 6%. And $1 billion of 10-year notes, non-callable for five years, is talked to yield 5¼% to 5½%, again deep inside of initial guidance of 6% to 6¼%.

Timing on the deal accelerated. Books were scheduled to close at 11 a.m. ET on Thursday, with the notes set to price Thursday afternoon. The deal had been announced earlier in the week as expected Friday business.

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

The shift of proceeds to the loan from the notes increased the size of the company's term loan B to $2.75 billion from $1 billion.

The San Francisco-based electric and natural gas utility plans to use the proceeds from the notes, the loan and $8.93 billion of Pacific Gas and Electric Co. investment-grade bonds to finance its exit from Chapter 11 bankruptcy.

The company filed for bankruptcy protection early in 2019 in the face of massive claims against it for California wildfires.

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