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MarketScreener Homepage  >  Equities  >  Nyse  >  PG&E Corporation    PCG

PG&E CORPORATION

(PCG)
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PG&E Chases Hot Debt Markets Ahead of Bankruptcy Plan Approval

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06/08/2020 | 04:04pm EDT

By Peg Brickley

PG&E Corp. wants authority to tap hot corporate debt markets for about $11 billion in financing even as courtroom arguments continue about the company's bankruptcy exit plan.

At a court hearing Monday, the judge presiding over PG&E's bankruptcy said he was open to signing such an order if PG&E can get official creditors' representatives to go along with the move.

The financing would help pave PG&E's path out of bankruptcy, providing money to pay people, businesses and insurers for damages stemming from several wildfires that swept California in 2017 and 2018. To exit bankruptcy, PG&E needs confirmation from Judge Dennis Montali in the U.S. Bankruptcy Court in San Francisco and financing to put the restructuring plan into effect.

Conditions in the debt markets are so favorable that California's largest utility is prepared to take a chance on raising the money even before the confirmation ruling, PG&E lawyer Stephen Karotkin said.

"It's important for [PG&E] to take advantage of the markets. The markets are pretty robust right now," Mr. Karotkin said. Stressing the importance of securing financing at low interest rates, he said every point of interest that PG&E must pay on the debt financing translates into a $100 million expense for the company.

PG&E was planning to wait for a signed confirmation order before turning to the public debt markets for the financing, described in court papers as investment-grade bonds issued by the utility, and high-yield bonds at the PG&E corporate level.

On Monday, PG&E said it doesn't want to wait, despite warnings that it might have to hand the money back if its chapter 11 plan fails to go into effect.

The bond issuance would only make up part of the money PG&E needs to finance a bankruptcy plan that provides for $25.5 billion in payments to people, businesses and governments that suffered damage by wildfires linked to the utility's equipment.

PG&E filed for chapter 11 bankruptcy protection in January 2019, awash in demands for damages for lives, homes and businesses lost or disrupted by wildfires in 2017 and 2018. The utility has been in court for days, trying to get a signature from Judge Montali by June 30, if not earlier, on a chapter 11 plan that embodies a series of agreements with major creditor groups.

Robert Julian, a lawyer for the official committee representing fire victims, said it has one dispute left to resolve with PG&E. Half of the $13.5 billion going into a trust to pay fire victims would be in the form of stock, and fire victims want equal treatment with institutional investors on the terms of their stockholdings, Mr. Julian said.

The dispute is in mediation and could be settled at any time. But without a pact on stock rights with fire victims, PG&E can't count on being able to get out of bankruptcy, Mr. Julian said at the hearing.

Separately, PG&E is raising $9 billion in equity financing.

Write to Peg Brickley at peg.brickley@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
LINE CORPORATION 0.19% 5370 End-of-day quote.0.37%
PG&E CORPORATION 0.20% 10.25 Delayed Quote.-5.70%
THE NEW HOME COMPANY INC. 0.60% 5.06 Delayed Quote.8.58%
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Financials (USD)
Sales 2020 18 443 M - -
Net income 2020 -1 003 M - -
Net Debt 2020 37 672 M - -
P/E ratio 2020 -14,1x
Yield 2020 -
Capitalization 19 900 M 19 900 M -
EV / Sales 2020 3,12x
EV / Sales 2021 3,12x
Nbr of Employees 23 000
Free-Float 74,0%
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 12,83 $
Last Close Price 10,25 $
Spread / Highest target 46,3%
Spread / Average Target 25,2%
Spread / Lowest Target 7,32%
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Managers
NameTitle
William Lloyd Smith Chief Executive Officer & Director
Robert C. Flexon Independent Non-Executive Chairman
Christopher Foster Chief Financial Officer & Vice President-Treasury
Ajay Waghray Chief Information Officer & Senior Vice President
Cheryl F. Campbell Independent Director
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