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PG&E lines up US$5.5b to fund 2-year bankruptcy process
[NEW YORK] PG&E Corp has arranged US$5.5b to fund its operations during a bankruptcy process that it expects to take about two years, boosting the shares.
Four banks agreed to provide debtor-in-possession funding including a US$3.5 billion revolving credit facility, the embattled California utility said in a filing with the US Securities and Exchange Commission Tuesday. PG&E reiterated its intention to begin a Chapter 11 reorganisation around Jan 29.
PG&E previously sought protection from creditors in 2001 in a process that took about three years, after its Pacific Gas & Electric utility unit filed for bankruptcy. That came amid an electricity crisis in the state that led to severe price spikes and rolling power outages. Now, the utility must decide how to maintain safe operations while shielding the company in bankruptcy from as much as US$30 billion or more in liabilities from wildfires that devastated the state in 2017 and 2018, killing more than 100 people.
"It's a pretty substantial amount of cash so it does look like they expect to stay in bankruptcy for some stretch,'' said Kit Konolige, a senior analyst with Bloomberg Intelligence.
The banks in the agreement are JPMorgan Chase & Co., Bank of America Corp., Barclays Plc and Citigroup Inc.
"PG&E expects that the DIP facilities will provide it with sufficient liquidity to fund its ongoing operations, including its ability to provide safe service to customers during the Chapter 11 cases," the company said in the filing. "PG&E currently expects the Chapter 11 cases to take, subject to satisfaction of certain terms and conditions, approximately two years."
Investigators are probing whether PG&E's equipment ignited the deadliest and most destructive blaze in California history, the November Camp Fire, which destroyed the town of Paradise, killed 86 people and razed almost 14,000 homes.