Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth above in Item 1.01 under the headings "New Utility
Debt," "Reinstated Senior Notes," "Utility Revolving Credit Agreement and Term
Loan Credit Agreement" and "Corporation Revolving Credit Agreement" is hereby
incorporated into this Item 2.03 by reference.
Item 3.02. Unregistered Sales of
Issuance to the Fire Victim Trust Pursuant to the Plan On the Effective Date, pursuant to the Plan, the Utility entered into an assignment agreement with theFire Victim Trust , pursuant to which the Utility agreed to transfer to theFire Victim Trust on the Effective Date 476,995,175 shares (such shares, the "Fire Victim Trust Shares") of common stock of the Corporation, no par value (the "Common Stock"). The transfer of shares of Common Stock to theFire Victim Trust was exempt from registration under the Securities Act pursuant to section 1145 of the Bankruptcy Code, as approved by theBankruptcy Court in the Order datedJune 16, 2020 [Docket No. 7972]. If, as of the later of (i) the first business day followingJuly 25, 2020 and (ii) the last Mandatory Redemption Settlement Date (as defined in each of the prepaid forward stock purchase agreements between the Corporation and certain investors) (such later date, the "Settlement Date"), the Corporation has issued any additional equity units to the underwriters of the Equity Units Offering (the "Option Securities "), the Debtors will issue an additional number of shares of Common Stock to theFire Victim Trust such that theFire Victim Trust would own 22.19% of Common Stock based on the number of fully diluted shares of the Corporation (using the treasury stock method) that would have been outstanding as of the Effective Date assuming all the equity transactions specified in the Plan were consummated on the Effective Date and all theOption Securities issued by the Settlement Date were issued on the Effective Date, subject to a cap of 748,415 additional shares. Issuance to Certain Investors Pursuant to the Investment Agreement As previously disclosed, onJune 7, 2020 , the Corporation entered into an investment agreement (the "Investment Agreement") with certain investors (the "Investors") relating to the issuance and sale to the Investors of an aggregate of$3.25 billion of Common Stock. On the Effective Date, pursuant to the terms of the Investment Agreement, the Corporation issued to the Investors 342,105,261 shares of Common Stock. This issuance and sale was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act. -------------------------------------------------------------------------------- Issuance to the Backstop Parties Pursuant to the Backstop Commitment Letters As previously disclosed, the Corporation agreed to issue shares of Common Stock to certain investors (the "Backstop Parties") as commitment premiums pursuant to Amended and Restated Chapter 11 Plan Backstop Commitment Letters and prepaid forward contracts. On the Effective Date, the Corporation issued to the Backstop Parties 169,000,016 shares of Common Stock. This issuance and sale was exempt from registration under the Securities Act pursuant to section 1145 of the Bankruptcy Code, as approved by theBankruptcy Court in the Order datedJune 16, 2020 [Docket No. 7972]. Contribution to the Utility Pursuant to the Plan On the Effective Date, the Corporation made an equity contribution of$12.9 billion in cash, along with the Fire Victim Trust Shares, to the Utility, which used the funds to satisfy and discharge certain liabilities of the Debtors under the Plan and transferred the Fire Victim Trust Shares to theFire Victim Trust as described above. The Corporation's cash equity contribution was funded by proceeds from the financing transactions described herein. This equity issuance to the Corporation by the Utility was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act. Item 3.03. Material Modifications to Rights of Security Holders.
The information set forth above in Item 1.01 under the heading "Reinstated
Senior Notes" is hereby incorporated into this Item 3.03 by reference.
On the Effective Date, the Corporation entered into the Pledge Agreement, dated
as of
Certain Officers; Compensatory Arrangements of Certain Officers. Departure and Appointment of Directors As previously disclosed in Item 5.02 of the Debtors' Current Report on Form 8-K filed onJune 24, 2020 , in connection with the implementation of the Plan, the Debtors announced that certain members of the board of directors for each of the Debtors would cease to serve on the board of directors for each of the Debtors and new directors would be appointed. On the Effective Date,Richard R. Barrera ,Nora Mead Brownell ,Fred J. Fowler ,Michael J. Leffell ,Meridee A. Moore ,Eric D. Mullins ,Kristine M. Schmidt ,Alejandro D. Wolff andWilliam D. Johnson ceased to serve on the board of directors for each of the Debtors. Also on the Effective Date,Rajat Bahri ,Kerry W. Cooper ,Jessica L. Denecour , Mark E. Ferguson III,Robert C. Flexon ,William Craig Fugate ,Arno L. Harris ,Michael R. Niggli , Jr.,Dean L. Seavers , Oluwadara J. Treser andBenjamin F. Wilson were appointed to the board of the Corporation andRajat Bahri ,Kerry W. Cooper , Mark E. Ferguson III,William Craig Fugate ,Arno L. Harris ,Dean L. Seavers , Oluwadara J. Treseder andBenjamin F. Wilson were appointed to the board of the Utility.Jessica L. Denecour ,Robert C. Flexon andMichael R. Niggli , Jr. serve on the boards of directors of other entities that are utilities or that do business with the Utility. In order to serve on the board of the Utility, theFederal Energy Regulatory Commission ("FERC") must grant a waiver of section 305 of the Federal Power Act, which, among other things, prohibits persons from concurrently holding positions as director of two or more public utilities or from concurrently holding the -------------------------------------------------------------------------------- positions of director of a public utility and a company supplying electrical equipment to such public utility, unless authorized byFERC . These three individuals have filed withFERC a request for waivers to allow them to sit on the board of the Utility (collectively, "Waiver Application"), as well as a motion for expedited consideration of the Waiver Application.Jessica Denecour ,Robert Flexon andMichael Niggli will not be seated on the board of the Utility pending resolution of the matters that are the subject of the Waiver Application. OnJune 30, 2020 ,Dominique Mielle resigned from the boards of directors of the Debtors. OnJune 30, 2020 , the Debtors reached an agreement with representatives of the Governor of theState of California to appointFilsinger Energy Partners , a consulting firm, as an operational observer untilSeptember 30, 2020 .Ms. Mielle resigned in connection with the previously disclosed board transition and the implementation of the Plan, as well as a disagreement with the Debtors over whether to enter into such agreement related to the operational observer.Ms. Mielle served as Chair of the Audit Committee of the boards of directors of the Debtors. A copy of the written correspondence fromMs. Mielle concerning the circumstances surrounding her resignation is attached to this Current Report on Form 8-K as Exhibit 99.1. Item 8.01. Other Events. Equity Offerings As previously disclosed, onJune 25, 2020 , the Corporation priced a public offering of 423,372,629 shares of Common Stock (the "Shares") at a public offering price of$9.50 per share (the "Common Stock Offering"). In addition, onJune 25, 2020 , the Corporation priced a public offering of 14,545,455 equity units (the "Equity Units"), with each Equity Unit having a stated amount of$100.00 (the "Equity Units Offering" and, together with the Common Stock Offering, the "Equity Offerings"). Each Equity Unit offered is comprised of (i) a prepaid forward stock purchase contract (each, a "Purchase Contract") of the Corporation and (ii) a 1/48,000th undivided beneficial ownership interest in specified zero-couponU.S. treasury securities (the "Treasury Strips") maturing on a quarterly basis from, and including,August 15, 2020 through, and including,August 15, 2023 (each, a "Treasury Strip Component"). The Common Stock Offering and the Equity Units Offering closed onJuly 1, 2020 , and the Corporation issued and sold a total of 423,372,629 shares of its common stock and 14,545,455 Equity Units. The offering and sale of the Shares and Equity Units were made pursuant to the Corporation's Registration Statement on Form S-3 (File No. 333-236629-01). Equity Units The Corporation issued the Equity Units and Purchase Contracts under the Purchase Contract and Unit Agreement dated as ofJuly 1, 2020 (the "Purchase Contract Agreement"), between the Corporation andThe Bank of New York Mellon Trust Company, N.A. , as purchase contract agent (the "Purchase Contract Agent"), and as attorney-in-fact for holders of Purchase Contracts. On any business day during the period beginning on, and including, the business day immediately followingJuly 1, 2020 to, but excluding, the second scheduled trading day immediately precedingAugust 16, 2023 , a holder of 48,000 Equity Units (or any integral multiple thereof) will have the right to withdraw the Treasury Strips evidenced by such Equity Units and hold the underlying Purchase Contracts separately rather than in the form of Equity Units (any such purchase contract, a "Separate Purchase Contract"). The foregoing description of the Equity Units and the following descriptions the Purchase Contracts and the Treasury Strips are summaries and are not meant to be complete descriptions of the Equity Units, the Purchase Contracts and the Treasury Strips. Each summary is qualified in its entirety by the Purchase Contract Agreement (including the forms of Equity Unit and Purchase Contract) and the Custodial Agreement (as defined below), as applicable, which are filed as Exhibits 4.9, 4.10, 4.11 and 4.12, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. Purchase Contracts Unless settled early at the holder option, for each Purchase Contract the Corporation will deliver to holders onAugust 16, 2023 a number of shares of its Common Stock. The number of shares of common stock issuable upon settlement of each Purchase Contract will be determined as follows: • if the Applicable Market Value (as defined below) of the common stock is greater than the threshold appreciation price (approximately$11.6375 ), then the holder will receive 8.5929 shares of common stock for each Purchase Contract (the "Minimum Settlement Rate"); • if the Applicable Market Value of the common stock is greater than or equal to the reference price (approximately$9.5000 ) but less than or equal to the threshold appreciation price, then the holder will receive a number of shares of common stock for each Purchase Contract equal to the Equity Unit stated amount of$100 , divided by the Applicable Market Value; and
--------------------------------------------------------------------------------
• if the Applicable Market Value of the common stock is less than the reference price, then the holder will receive 10.5263 shares of common stock for each Purchase Contract (the "Maximum Settlement Rate"). The "Applicable Market Value" means the arithmetic average of the VWAPs (as defined in the Purchase Contract Agreement) per share of the Corporation's common stock on each of the 20 consecutive trading days beginning on, and including, the 21st scheduled trading day immediately precedingAugust 16, 2023 . The Minimum Settlement Rate and the Maximum Settlement Rate are each subject to adjustment as set forth in the Purchase Contract Agreement. At any time prior to5:00 p.m. ,New York City time, on the second scheduled trading day immediately precedingAugust 16, 2023 , a holder of 48,000 Equity Units (or any integral multiple thereof) or a holder of one or more Separate Purchase Contracts, may elect to settle such Equity Units or Separate Purchase Contracts early and receive a number of shares of common stock per Purchase Contract equal to the Minimum Settlement Rate. In addition, at any time prior to the second scheduled trading day immediately precedingAugust 16, 2023 , if a "Fundamental Change" (as defined in the Purchase Contract Agreement) occurs, a holder of 48,000 Equity Units (or any integral multiple thereof) or a holder of one or more Separate Purchase Contracts, may elect to settle such Equity Units or Separate Purchase Contracts early and receive a number of shares of common stock per Purchase Contract equal to the "Fundamental Change Early Settlement Rate" as defined in, and in accordance with, the Purchase Contract Agreement. In either case, upon early settlement at a holder's election of a Purchase Contracts held as components of Equity Units, the Custodian (as defined below) will deliver the Treasury Strips evidenced by those Equity Units on the second business day following the applicable early settlement date. Treasury Strips The Treasury Strips underlying the Equity Units will be held byThe Bank of New York Mellon Trust Company, N.A. , as agent for the holders of Equity Units (the "Custodian"), and will be subject to the terms of the Custodial Agreement dated as ofJuly 1, 2020 (the "Custodial Agreement"), between the Custodian and Purchase Contract Agent. The Custodian will, upon instructions from the Purchase Contract Agent, forward to each holder of Equity Units the amount it receives from theU.S. government in respect of each Treasury Strip underlying the Equity Units owned by such holder on the business day immediately following the date such Treasury Strip matures onFebruary 15 ,May 15 ,August 15 andNovember 15 of each year, with such payments commencing on, and including,August 17, 2020 , and ending on, and including,August 16, 2023 . The Corporation expects that the amount payable per Equity Unit per full quarter as described in the immediately preceding sentence will be equal to$1.3750 , which represents an annual rate of return on the stated amount per Equity Unit of 5.50%. The Corporation expects that the amount payable per Equity Unit onAugust 17, 2020 will be equal to$0.6875 . The Corporation will have no obligation, responsibility or liability with respect to the purchase of Treasury Strips and their delivery into the custody of the Custodian, the performance or non-performance of the duties of the Custodian or any payment of the Treasury Strips Components. Release of Debt Proceeds from Escrow As previously disclosed in Item 8.01 of the Debtors' Current Report on Form 8-K filed onJune 19, 2020 , on such date the Utility completed the sale of$8,925,000,000 aggregate principal amount of first mortgage bonds in a registered offering. As previously disclosed in Item 8.01 of the Debtors' Current Report on Form 8-K filed onJune 23, 2020 , on such date (i) the Corporation completed the sale of$2,000,000,000 aggregate principal amount of senior secured notes in a registered offering and (ii) the Corporation obtained a$2.75 billion secured term loan under the Corporation Term Loan Credit Agreement. The proceeds of these transactions (along with certain other funds provided by the Corporation and the Utility) were deposited into separate escrow accounts pursuant to separate escrow agreements. On the Effective Date, the Corporation and the Utility submitted release requests to the escrow agent, certifying that the escrow release provisions had occurred, and the proceeds and other amounts held in the escrow accounts were released to the Corporation and the Utility. Funding of thePublic Entities Segregated Defense Fund On the Effective Date, the Debtors funded thePublic Entities Segregated Defense Fund in accordance with the terms of the Public Entities Plan Support Agreements, as previously disclosed in Item 1.01 of the Debtors' Current Report on Form 8-K filedJune 19, 2020 and also made a payment of$1.0 billion in cash to the public entities who are party to the Public Entities Plan Support Agreements. -------------------------------------------------------------------------------- Funding ofSubrogation Wildfire Trust On the Effective Date, the Debtors funded$100 million to theSubrogation Wildfire Trust and placed$10.895 million in a segregated escrow account established and owned by theSubrogation Wildfire Trust for the benefit of holders of Subrogation Wildfire Claims. Contribution to Go-ForwardWildfire Fund On the Effective Date, the Debtors contributed, in accordance with AB 1054, an initial contribution of approximately$4.8 billion and first annual contribution of approximately$193 million to the Go-ForwardWildfire Fund to secure participation of the Reorganized Debtors therein. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit Number Description 4.1 Third Supplemental Indenture, dated as ofJuly 1, 2020 , to the Indenture of Mortgage, betweenPacific Gas and Electric Company andThe Bank of New York Mellon Trust Company, N.A. , as trustee (including forms of the New Short-Term Bonds and the New Long-Term Bonds) 4.2 Fourth Supplemental Indenture, dated as ofJuly 1, 2020 , to the Indenture of Mortgage, betweenPacific Gas and Electric Company andThe Bank of New York Mellon Trust Company, N.A. , as trustee (including forms of the Funded Debt Exchange Bonds) 4.3 Thirtieth Supplemental Indenture, dated as ofJuly 1, 2020 , to the Amended and Restated Indenture, dated as ofApril 22, 2005 , betweenPacific Gas and Electric Company andBOKF, N.A. , as trustee (including forms of certain series of Reinstated Senior Notes) 4.4 First Supplemental Indenture, dated as ofJuly 1, 2020 , to the Indenture, dated as ofNovember 29, 2017 , betweenPacific Gas and Electric Company andBOKF, N.A. , as trustee (including forms of certain series of Reinstated Senior Notes) 4.5 Second Supplemental Indenture, dated as ofJuly 1, 2020 , to the Indenture, dated as ofAugust 6, 2018 , betweenPacific Gas and Electric Company andBOKF, N.A. , as trustee (including forms of certain series of Reinstated Senior Notes) 4.6 Second Supplemental Indenture, dated as ofJuly 1, 2020 , to the Indenture of Mortgage, betweenPacific Gas and Electric Company andThe Bank of New York Mellon Trust Company, N.A. , as trustee (including forms of the Senior Notes Collateral Bonds) 4.7 Fifth Supplemental Indenture, dated as ofJuly 1, 2020 , to the Indenture of Mortgage, betweenPacific Gas and Electric Company andThe Bank of New York Mellon Trust Company, N.A. , as trustee (including forms of the Credit Agreement Collateral Bonds) 4.8 Pledge Agreement, dated as ofJuly 1, 2020 , amongPG&E Corporation ,JPMorgan Chase Bank, N.A ., as collateral agent, revolving administrative agent and term administrative agent,The Bank of New York Mellon Trust Company, N.A. , and the secured representatives party thereto from time to time 4.9 Purchase Contract and Unit Agreement, datedJuly 1, 2020 , between the Corporation andThe Bank of New York Mellon Trust Company, N.A. , as purchase contract agent and attorney-in-fact for the holders from time to time as provided therein 4.10 Form of Equity Unit (included in Exhibit 4.9) 4.11 Form of Purchase Contract (included in Exhibit 4.9) 4.12 Custodial Agreement, datedJuly 1, 2020 , betweenThe Bank of New York Mellon Trust Company , N.A., as purchase contract agent andThe Bank of New York Mellon Trust Company, N.A. , as custodian 5.1 Opinion ofHunton Andrews Kurth LLP 5.2 Opinion ofHunton Andrews Kurth LLP 5.3 Opinion ofCravath, Swaine & Moore LLP 10.1 Tax Benefits Payment Agreement between the Corporation and the FireVictim Trust , datedJuly 1, 2020 10.2 Registration Rights Agreement between theFire Victim Trust and the Corporation, datedJuly 1, 2020 10.3 Credit Agreement, dated as ofJuly 1, 2020 , amongPacific Gas and Electric Company , the several lenders from time to time party thereto,JPMorgan Chase Bank, N.A . andCitibank, N.A ., as co-administrative agents, andCitibank, N.A ., as designated agent. 10.4 Term Loan Credit Agreement, dated as ofJuly 1, 2020 , amongPacific Gas and Electric Company , the several lenders from time to time party thereto andJPMorgan Chase Bank, N.A ., as administrative agent.
--------------------------------------------------------------------------------
10.5 Credit Agreement, dated as ofJuly 1, 2020 , amongPG&E Corporation , the several lenders from time to time party thereto,JPMorgan Chase Bank, N.A ., as administrative agent, andJPMorgan Chase Bank, N.A ., as collateral agent. 23.1 Consent ofHunton Andrews Kurth LLP (included in Exhibit 5.1) 23.2 Consent ofHunton Andrews Kurth LLP (included in Exhibit 5.2) 23.3 Consent ofCravath, Swaine & Moore LLP (included in Exhibit 5.3) 99.1 Written correspondence fromDominique Mielle concerning her resignation 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document Forward-Looking Statements This Current Report on Form 8-K includes forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of the Corporation and the Utility, including but not limited to the Plan and related financings and agreements. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in the Corporation and the Utility's Annual Report on Form 10-K for the year endedDecember 31, 2019 , their Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2020 and their subsequent reports filed with theSecurities and Exchange Commission . The Corporation and the Utility undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.
--------------------------------------------------------------------------------
© Edgar Online, source