Item 8.01 Other Events.
Equity Offerings
As previously disclosed, on January 29, 2019, PG&E Corporation (the
"Corporation") and its subsidiary, Pacific Gas and Electric Company (the
"Utility" and, together with the Corporation, the "Debtors") filed voluntary
petitions for relief under chapter 11 of title 11 ("Chapter 11") of the United
States Code in the U.S. Bankruptcy Court for the Northern District of California
(the "Bankruptcy Court"). The Debtors' Chapter 11 cases are being jointly
administered under the caption In re: PG&E Corporation and Pacific Gas and
Electric Company, Case No. 19-30088 (DM) (the "Chapter 11 Cases"). On June 19,
2020, the Debtors, certain funds and accounts managed or advised by Abrams
Capital Management, L.P., and certain funds and accounts managed or advised by
Knighthead Capital Management, LLC filed the Debtors' and Shareholder
Proponents' Joint Chapter 11 Plan of Reorganization dated June 19, 2020 [Docket
No. 8048] with the Bankruptcy Court (as may be further modified, amended, or
supplemented from time to time and, together with all exhibits and schedules
thereto, the "Plan"). On June 20, 2020, the Bankruptcy Court entered an order
[Docket No. 8053] confirming the Plan, which incorporates the Bankruptcy Court's
prior order approving the Plan funding transactions and documents [Docket No.
7909].
On June 25, 2020, the Corporation priced (i) an offering of 423,372,629 shares
of its common stock, no par value (the "Shares"), at a public offering price of
$9.50 per share (the "Common Stock Offering") and (ii) a concurrent offering of
14,545,455 of its 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") for total net proceeds
to the Corporation, after deducting the underwriting discounts and before
estimated offering expenses payable by the Corporation, of $3,968 million and
$1,186 million, respectively. Each Equity Unit will consist of (i) a prepaid
forward stock purchase contract (each, a "Purchase Contract") of the Company and
(ii) a 1/48,000th undivided beneficial ownership interest in specified
zero-coupon U.S. treasury securities maturing on a quarterly basis from, and
including, August 15, 2020 through, and including, August 15, 2023. Each
Purchase Contract will automatically settle on August 16, 2023 (subject to
postponement in certain limited circumstances). The maximum settlement rate per
Purchase Contract will be 10.5263 shares of common stock (which corresponds to a
reference price of approximately $9.5000 per share of common stock), and the
minimum settlement rate per Purchase Contract will be 8.5929 shares of common
stock (which corresponds to a threshold appreciation price of approximately
$11.6375 per share of common stock). The Corporation expects that the amount
payable per Equity Unit per full quarter in respect of the relevant zero-coupon
U.S. treasury strips will be equal to $1.3750, which represents an annual rate
of return on the stated amount per Equity Unit of 5.50%. The U.S. treasury
strips will be held by The Bank of New York Mellon Trust Company, N.A., as
custodian and agent for the holders of Equity Units. The Corporation will not
receive any proceeds from, or have any obligations with respect to, the U.S.
treasury strips.
On June 25, 2020, in connection with the Common Stock Offering, the Corporation
entered into an underwriting agreement (the "Common Stock Underwriting
Agreement") with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as
representatives of the several underwriters named in Schedule I thereto (the
"Common Stock Underwriters"), pursuant to which the Corporation agreed to issue
and sell the Shares to the Common Stock Underwriters. In addition, on June 25,
2020, in connection with the Equity Units Offering, the Corporation entered into
an underwriting agreement (the "Equity Units Underwriting Agreement" and,
together with the Common Stock Underwriting Agreement, the "Underwriting
Agreements") with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as
representatives of the several underwriters named in Schedule I thereto (the
"Equity Units Underwriters"), pursuant to which the Corporation agreed to issue
and sell 14,545,455 Purchase Contracts to the Equity Underwriters in order for
the Equity Units Underwriters to sell 14,545,455 Equity Units. For a complete
description of the terms and conditions of the Underwriting Agreements, refer to
the Common Stock Underwriting Agreement and the Equity Units Underwriting
Agreement, which are filed as Exhibits 10.1 and 10.2, respectively, to this Form
8-K.
In connection with the Common Stock Offering and pursuant to the Common Stock
Underwriting Agreement, the Corporation granted the Common Stock Underwriters a
30-day option to purchase up to an additional 42,337,263 shares of common stock.
In addition, in connection with the Equity Units Offering and pursuant to the
Equity Units Underwriting Agreement, the Corporation also granted the Equity
Units Underwriters a 30-day option to purchase up to an additional 1,454,545
Purchase Contracts to be used by the Equity Units Underwriters to create up to
an additional 1,454,545 Equity Units.
Subject to the satisfaction of customary closing conditions and the concurrent
consummation of the transactions required to emerge from the Chapter 11 Cases
(including obtaining all required funding), the Corporation expects the Equity
Offerings to close on, and expects the effective date of the Plan (the
"Effective Date") to be, July 1, 2020. The Corporation expects to use the net
proceeds from the Equity Offerings, together with the net proceeds from certain
other Plan financing transactions, to effectuate the transactions contemplated
by the Plan in accordance with the terms and conditions contained in the Plan.
The Shares and the Equity Units have been registered under the Securities Act of
1933, as amended (the "Securities Act"), under the Registration Statement on
Form S-3 (File No. 333-236629-01), which initially became effective on June 9,
2020. On June 19, 2020, the Corporation filed with the Securities and Exchange
Commission, pursuant to Rule 424(b)(5) under the Securities Act, (i) a
preliminary prospectus supplement, dated June 19, 2020, related to the Common
Stock Offering and (ii) a preliminary prospectus supplement, dated June 19,
2020, related to the Equity Units Offering.
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Utility Debt Refinancing and Reinstatement
On the Effective Date, the Utility Short-Term Senior Notes, the Utility Impaired
Senior Notes and the Utility Funded Debt (except for $100 million of pollution
control bonds (Series 2008F and 2010E), which are to be repaid in cash) will be
refinanced and the Utility Reinstated Senior Notes will be reinstated and
collateralized through the issuance of a corresponding series of first mortgage
bonds of the Utility. Capitalized terms used but not defined in this paragraph
have the meanings given in the Plan.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Number
10.1 Underwriting Agreement, dated June 25, 2020, among PG&E Corporation,
Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as
representatives of the several underwriters named in Schedule I thereto,
in respect of the Common Stock Offering
10.2 Underwriting Agreement, dated June 25, 2020, among PG&E Corporation,
Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as
representatives of the several underwriters named in Schedule I thereto,
in respect of the Equity Units Offering
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, including the
Equity Offerings. 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, including the possibility that the conditions to emergence in
the Plan will not be satisfied. 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 ended December 31, 2019, their Quarterly Report on Form 10-Q
for the quarter ended March 31, 2020 and their subsequent reports filed with the
Securities and Exchange Commission. Additional factors include, but are not
limited to, those associated with the Corporation's and the Utility's Chapter 11
Cases. 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.
Non-Solicitation
This Current Report on Form 8-K shall not constitute an offer to sell or a
solicitation of an offer to buy securities, and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of that jurisdiction.
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