Pacific Gas and Electric has filed a revised restructuring plan, continuing its push to exit bankruptcy in time to meet a legislative deadline. And if it completes the reorganization by the end of June, it will gain access to a state fund created to cover future wildfire costs.
The California utility and its holding company PG&E (ticker: PCG) filed the updated plan late Thursday, following this week’s agreement with a group of under- and uninsured wildfire victims. The company also said it resolved a disagreement between those wildfire victims and the insurers and investors who own wildfire insurance claims.
“The company believes its Plan is confirmable, satisfies all requirements of Assembly Bill 1054 (AB 1054) and complies with the Bankruptcy Code,” the company said in a statement. “It is the product of extensive negotiations, treats all victims fairly, protects customers and employees, and will enable PG&E to emerge from Chapter 11 as a financially sound utility positioned to serve California for the long term.”
That $13.5 billion deal is the last major settlement it needed to promise to cover the costs of a series of destructive wildfires that its equipment has started in recent years. It also ends a court fight between PG&E and a group of individual wildfire victims, and gives the company and its shareholders a leg up over a group of bondholders that had introduced a competing plan.
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The bondholders dug in on Thursday, claiming that the company’s plan doesn’t fulfill key demands of regulators and California government officials. The statement from the group, led by Pimco and activist hedge fund Elliott Management, was reported by The Wall Street Journal.
PG&E says the updated restructuring plan puts it on track to leave bankruptcy court by the end of June 2020.
If it does complete the process by that deadline, a law passed earlier this year, PG&E will be able to access a wildfire fund — half financed by Californian ratepayers and half by the major utilities — to cover major wildfire costs. The new law also makes it easier for the state’s utilities to pass along costs of future fires to ratepayers.
PG&E stock was down 1.2% to $11.58 in Friday morning trading.
Write to Alexandra Scaggs at alexandra.scaggs@barrons.com
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PG&E Is One Step Closer to Getting Out of Bankruptcy - Barron's
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