PG&E talks $1.5 billion four-year convertible notes to yield 4.25% to 4.75%, up 30% to 35%

By Abigial W. Adams

Portland, Me., Nov. 29 – PG&E Corp. plans to price $1.5 billion in four-year secured convertible notes after the market close on Wednesday with price talk for a coupon of 4.25% to 4.75% and an initial conversion premium of 30% to 35%, according to a market source.

J.P. Morgan Securities LLC (lead left), Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are bookrunners for the Rule 144A offering, which has a greenshoe of $225 million.

The notes will be secured on a first lien basis by PG&E’s 100% ownership interest of the common stock of subsidiary Pacific Gas and Electric Co.

The notes will rank junior to current and future secured obligations secured by assets and junior to secured obligations under its revolving credit facility.

They will be equal to other obligations secured by common stock and senior to the company’s unsecured obligations.

The notes will be settled in cash, shares or a combination of both at the company’s option with the intention to settle the notes in cash up to the principal amount.

Proceeds will be used to repay a portion of the company’s outstanding $2.66 billion secured term loan maturing on June 23, 2025, which carries a floating interest rate that is currently 8.44%.

PG&E is an Oakland, Calif-based utility company.

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