PG&E Corp. won bankruptcy court approval to use up to $23 billion in financing after California Governor Gavin Newsom dropped his opposition, clearing a crucial obstacle to the power company’s push to exit Chapter 11.
U.S. Bankruptcy Judge Dennis Montali said Monday he’ll approve a financing motion for $11 billion in debt commitments and $9 billion in new equity that will support PG&E’s turnaround plan. PG&E can also raise an additional $3 billion through new shares under the plan.
Montali called the approval another “major step” in the bankruptcy and complemented the governor’s office and others for working with PG&E to move the process forward. PG&E attorney Paul Zumbro said it’s especially critical given the fallout on Wall Street from the coronavirus.
The plunge in equity markets “underscores with three bright red lines the importance of having committed financing,” Zumbro said during the hearing.
PG&E shares fell 12% Monday as the market at large plummeted.
The utility needs to win approval of its reorganization plan from the bankruptcy court and state regulators before a state deadline of June 30. That would allow the company to use a state wildfire fund to help cover the costs of possible future fire claims.
“It was important for the utility to get court approval of this motion,” said Negisa Balluku, bankruptcy litigation analyst for Bloomberg Intelligence. “It was probably the key motion for Newsom to object to if he had substantive concerns with PG&E’s post-emergence capital structure and debt load.”
The bankruptcy case is PG&E Corp. 19-bk-30088, U.S. Bankruptcy Court, Northern District of California (San Francisco).
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