PG&E CORPORATION 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 on June 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 and William 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 and Benjamin F. Wilson were appointed to the board of the
Corporation and Rajat Bahri , Kerry W. Cooper , Mark E. Ferguson III, William
Craig Fugate , Arno L. Harris , Dean L. Seavers , Oluwadara J. Treseder and
Benjamin F. Wilson were appointed to the board of the Utility.
Jessica L. Denecour , Robert C. Flexon and Michael 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, the Federal
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
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positions of director of a public utility and a company supplying electrical
equipment to such public utility, unless authorized by FERC . These three
individuals have filed with FERC 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 and Michael Niggli will not be seated on the board of the Utility
pending resolution of the matters that are the subject of the Waiver
Application.
On June 30, 2020 , Dominique Mielle resigned from the boards of directors of the
Debtors. On June 30, 2020 , the Debtors reached an agreement with representatives
of the Governor of the State of California to appoint Filsinger Energy Partners ,
a consulting firm, as an operational observer until September 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 from Ms. 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, on June 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, on
June 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-coupon
U.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 on July 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 of July 1, 2020 (the "Purchase
Contract Agreement"), between the Corporation and The 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 following July 1, 2020
to, but excluding, the second scheduled trading day immediately preceding
August 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 on August 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
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• 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 preceding August 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 to 5:00 p.m. , New York City time, on the second scheduled
trading day immediately preceding August 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
preceding August 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 by The 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 of July 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 the U.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 on February 15 , May 15 , August 15 and November 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 on August 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 on June 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 on June 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 the Public Entities Segregated Defense Fund
On the Effective Date, the Debtors funded the Public 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
filed June 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.
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Funding of Subrogation Wildfire Trust
On the Effective Date, the Debtors funded $100 million to the Subrogation
Wildfire Trust and placed $10.895 million in a segregated escrow account
established and owned by the Subrogation Wildfire Trust for the benefit of
holders of Subrogation Wildfire Claims.
Contribution to
Go-Forward
Wildfire 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-Forward
Wildfire 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 of July 1, 2020 , to the
Indenture of Mortgage, between Pacific Gas and Electric Company and
The 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 of July 1, 2020 , to the
Indenture of Mortgage, between Pacific Gas and Electric Company and
The 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 of July 1, 2020 , to the
Amended and Restated Indenture, dated as of April 22, 2005 , between
Pacific Gas and Electric Company and BOKF, N.A. , as trustee (including
forms of certain series of Reinstated Senior Notes)
4.4 First Supplemental Indenture, dated as of July 1, 2020 , to the
Indenture, dated as of November 29, 2017 , between Pacific Gas and
Electric Company and BOKF, N.A. , as trustee (including forms of
certain series of Reinstated Senior Notes)
4.5 Second Supplemental Indenture, dated as of July 1, 2020 , to the
Indenture, dated as of August 6, 2018 , between Pacific Gas and
Electric Company and BOKF, N.A. , as trustee (including forms of
certain series of Reinstated Senior Notes)
4.6 Second Supplemental Indenture, dated as of July 1, 2020 , to the
Indenture of Mortgage, between Pacific Gas and Electric Company and
The 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 of July 1, 2020 , to the
Indenture of Mortgage, between Pacific Gas and Electric Company and
The 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 of July 1, 2020 , among PG&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, dated July 1, 2020 , between
the Corporation and The 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, dated July 1, 2020 , between The Bank of New
York Mellon Trust Company , N.A., as purchase contract agent and The
Bank of New York Mellon Trust Company, N.A. , as custodian
5.1 Opinion of Hunton Andrews Kurth LLP
5.2 Opinion of Hunton Andrews Kurth LLP
5.3 Opinion of Cravath, Swaine & Moore LLP
10.1 Tax Benefits Payment Agreement between the Corporation and the Fire
Victim Trust , dated July 1, 2020
10.2 Registration Rights Agreement between the Fire Victim Trust and the
Corporation, dated July 1, 2020
10.3 Credit Agreement, dated as of July 1, 2020 , among Pacific Gas and
Electric Company , the several lenders from time to time party thereto,
JPMorgan Chase Bank, N.A . and Citibank, N.A ., as co-administrative
agents, and Citibank, N.A ., as designated agent.
10.4 Term Loan Credit Agreement, dated as of July 1, 2020 , among Pacific
Gas and Electric Company , the several lenders from time to time party
thereto and JPMorgan Chase Bank, N.A ., as administrative agent.
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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.
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