PG&E Says It Will File Reorganization Plan in Less Than a Month

PG&E Corp. says it expects to file its plan for reorganization with the bankruptcy court by Sept. 9 and sees emerging from Chapter 11 protection by May 1, according to a filing Monday.

• The bankrupt utility says in the filing that it has $10.5 billion in equity commitments with more than 20 financial institutions signed up to help fund its recovery plan.
• PG&E says several financial institutions have expressed high confidence they can raise $35 billion to $40 billion of both debt and equity capital to satisfy claims, refinance indebtedness, and address other bankruptcy related and post-emergence uses.
• PG&E says plan values the reorganized equity multiples higher than proposed in a competing bid by an ad hoc group of bondholders led by Pacific Investment Management Co. and Elliott Management Corp.

Insights

• PG&E’s disclosure marks the first time the company has signaled exactly when it will file its reorganization plan for the largest utility bankruptcy in history.
• The filing comes a day before Bankruptcy Judge Dennis Montali is scheduled to hear a motion by the ad hoc bondholders to take away PG&E’s exclusive right to propose a Chapter 11 plan. Holders of insurance claims have also called for the termination of PG&E’s exclusive right to pitch a plan, which now extends until Sept. 29.
• Knighthead Capital Management and Abrams Capital Management, which together own about 7.8% of the California utility, said last week they are seeking to raise $15 billion in equity through a rights offering to bolster PG&E’s plan to emerge from bankruptcy.
• PG&E said in a filing Sunday that it needs to submit its reorganization plan to California regulators by January.
• PG&E filed for bankruptcy in January of this year due to an estimated $30 billion in liabilities from wildfires tied to its equipment.

Market Reaction

• PG&E shares rose 1.5% in extended trading after falling 7.6% Monday to $16.75 at the close in New York.