PG&E Says Deal is Close with Elliot and PIMCO

Published On: January 17, 2020

PG&E said this week that they held discussions with the creditors committee ahead of a bankruptcy court hearing on Tuesday. PG&E told the press that, during the brief hearing, the two parties were involved in “constructive negotiations.” According to press reports, while a deal hasn’t yet been struck and the talks may still break off, private talks may produce a deal that could pave the way for PG&E to emerge from bankruptcy by the June 30, 2020, deadline.

In a statement issued to the press, PG&E said it has been holding discussions with stakeholders on its reorganization and hopes “to make progress over the next week.” In addition to the pronouncements by the utility, Governor Newsom told folks at a fundraiser this week that a “major” announcement on energy could occur this coming week. Could he have been signaling a deal?

A deal with bondholders would leave Newsom as the last major obstacle to PG&E’s restructuring plan. The company has been trying for several months to craft a proposal that would pay $13.5 billion to wildfire victims while keeping the current shareholders in place.

According to a report by Bloomberg, under the deal being negotiated, the creditors’ investment in the company would replace some of the exit financing that PG&E is proposing as part of its restructuring. Bonds with a coupon below 5% would be reinstated as part of the agreement being hammered out, and those above 5% would be revised to 4.75% through a mix of 10-year and 30-year bonds. The creditors would also be given the right to participate in the company’s financial backstop commitments, a move that could hand them a part of the equity financing in the deal.

The bankruptcy case is PG&E Corp. 19-bk-30088, U.S. Bankruptcy Court Northern District of California (San Francisco).

About the Author: Jesus Arredondo

Jesus Arredondo is an Energy Industry Analyst and former State of California official. He can be reached at jesus at govreport.org