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PG&E wins final approval for its bankruptcy reorganisation
[SAN FRANCISCO] PG&E won final approval of its bankruptcy plan, clearing the way for the California utility giant to emerge from one of the darkest chapters of its history.
US Bankruptcy Judge Dennis Montali issued an order Saturday confirming PG&E's Chapter 11 plan that will cover billions of dollars in damage claims stemming from catastrophic wildfires linked to the company's equipment. The judge said in an earlier written decision that he planned to approve the turnaround proposal because the alternative would leave tens of thousands of fire survivors with "no other options on the horizon".
PG&E needed the judge to sign off on its plan before the end of this month to qualify for a state wildfire insurance fund. That will help it cover damage claims from any future blazes sparked by its power lines.
"PG&E is committed to emerging from Chapter 11 as a fundamentally improved and transformed utility that meets the highest safety, governance, and operational standards," chief executive officer Bill Johnson said Saturday in a statement.
The company said it expects to emerge from bankruptcy in July.
PG&E filed for bankruptcy in January 2019 after its equipment was implicated in wildfires that killed more than 100 people and burned tens of thousands of homes across Northern California. It was the largest utility reorganisation in US history. The company is emerging from Chapter 11 saddled with nearly US$40 billion in debt after it agreed to settle claims from people, insurers and local government agencies for US$25.50 billion.
PG&E retired expensive high-coupon debt and replaced it with lower cost debt as a result of the Chapter 11 proceedings, yielding savings for customers, according to a statement.
With the judge's confirmation in hand, PG&E can begin marketing US$5.25 billion in shares as part of a plan to raise US$9 billion through new equity to help pay for the fire-related costs. It is also raising more than US$13 billion in the debt markets.
Some wildfire victims denounced PG&E's turnaround proposal, saying hedge funds and other investors stood to make billions from bets on the distressed utility while individual victims will have to take half of their US$13.50 billion settlement in shares in the reorganised company.
PG&E said it will implement all wildfire settlements it reached during its bankruptcy after it emerges, including the immediate funding of the victim trust.