PG&E sees bankruptcy exit after USD-5.15bn equity raise

PG&E Corporation (NYSE:PCG), the parent of San Francisco-based utility Pacific Gas and Electric Co (PG&E), will raise at least USD 5.15 billion (EUR 4.59bn) in common share and equity unit offerings to finance its plan to emerge from Chapter 11 bankruptcy.

The company priced an underwritten public offering of nearly 423.4 million shares of common stock at USD 9.50 per share, and a concurrent underwritten public offering of 14.5 million equity units at USD 100 apiece. PG&E expects to raise some USD 3.968 billion in the first transaction and USD 1.186 billion in the second, though this does not take into consideration the 30-day option granted to underwriters to purchase additional shares and units.

If the offerings are consummated successfully, the company expects to emerge from Chapter 11 on July 1, 2020, it said.

Goldman Sachs & Co LLC and JP Morgan serve as joint lead book-running managers for both offerings, similar to Barclays, Citigroup and BofA Securities.

PG&E and its holding company filed voluntary petitions under Chapter 11 of the US Bankruptcy Code in late January 2019, as the business was burdened with liabilities following wildfires caused by its own power lines. In December 2019, the company agreed to a settlement that resolved all claims arising from the fires and in January 2020 reached a deal with bondholders on its restructuring. In March 2020, the bankruptcy court of Northern California cleared PG&E to raise up to USD 23 billion in financing.

Last weekend, PG&E announced the completion of the initial stage of its bankruptcy exit financing, a day after the bankruptcy court confirmed its plan of reorganisation and a few days after raising USD 8.925 billion of debt. The bigger portion of that sum will go towards funding PG&E's initial contribution to the AB 1054 wildfire fund and to finance claims at emergence from Chapter 11. Some USD 3.5 billion are set aside as long-term debt to finance capital investments.

Also this month, PG&E priced a debt raise of USD 4.75 billion, the cost of which will be borne by its shareholders.

The company said on Sunday that it was able to retire expensive high-coupon debt and replace it with lower-cost debt, resulting in an estimated USD 250 million in annual savings for customers to be reflected in future bills later in 2020.

(USD 1.0 = EUR 0.890)

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