PG&E receives court approval to enter restructuring support agreement

By Caroline Salls

Pittsburgh, Feb. 5 – PG&E Corp. and Pacific Gas and Electric Co. received court approval to enter into a restructuring support agreement reached with an informal committee of its senior unsecured noteholders and with consenting shareholders, according to an order filed Wednesday with the U.S. Bankruptcy Court for the Northern District of California.

Under the agreement, the noteholder committee will withdraw its alternative plan of reorganization and support the PG&E plan.

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

PG&E said it and the consenting noteholders have agreed to the treatment of all pre-bankruptcy funded debt 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 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 confirmation of the plan by the bankruptcy court.

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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