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$31 Billion Bankruptcy Restructuring Plan Being Contemplated By US’s PG&E: Bloomberg


06/22/2019


$31 Billion Bankruptcy Restructuring Plan Being Contemplated By US’s PG&E: Bloomberg
The bankrupt United States utility giant PG&E Corp. is contemplating a new plan that would help it to be brought out of bankruptcy in March next year. The company is planning the establishment of a $14 billion fund that would take care of claims against it for past wildfires while another $20 billion statewide fund is to be established for taking care of any claims for future fires.
 
According to a report published by Bloomberg based on a company document, the company is expected to file the proposal in August. The company is also considering getting refinance for about $11 billion in debt and accrued interest.
 
According to the plan as shown in the document, the company would roll over about $14 billion of California of Department of Water Resources bonds, another $3 billion would be generated in contributions from PG&E and a further $3 billion would be generated from contributions from other utilities, which together would be able create a fund that would be applicable throughout the state of California for any future wildfire claims.
 
“We are looking at all options when it comes to working with the governor and legislature, and are committed to resolving wildfire victims’ claims fairly and expeditiously, mitigating wildfire risks, continuing to deliver safe and reliable energy to our customers, and supporting the state’s bold clean energy goals,” PG&E said in an emailed statement to Bloomberg.
 
$15 billion of securitizations, the issuance of $14 billion in debt and $2 billion in insurance proceeds would be used for the establishment of the package which is expected to be valued at about $31 billion. The new plan made by the company does not consider any contribution from any new equity. The proposal however would need the passing of a legislation for the implementation of the wildfire fund as well as estimating the size and structure of the securitizations.
 
One of the largest utility companies of the US and the largest in California, the PG&E has conceded to a payout of $1 billion as damage compensations to local government agencies.
 
The publication of the news propped the shares of the company by as much as 6.9 per cent. 
 
The plan also involves redirecting a part of the net earnings of the company into a fund for a number of years for the creation of a $10 billion securitization fund. A number of measures of cost cutting which would include asset sales, management reductions and office closures would be implemented for the creation of another $5 billion of securitization fund.
 
News of this plan by PG&E comes on the heels of calls by California Governor Gavin Newsom for the creation of a wildfire fund which could be financed via bonds so that utility companies are able to pay for fire damage resulting from power lines, according to reports.
 
(Source:www.bloomberg.com)


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