(Bloomberg) -- PG&E Corp., the California utility giant that went bankrupt in January after its equipment ignited deadly wildfires, is trying to fill a $4.6 billion hole in financing to fund a restructuring plan.
The power company, California’s largest, is having to go back and renegotiate deals with investors who had committed to supplying $14 billion for its reorganization because it’s still working on a settlement with fire victims. The company disclosed that it lined up $7.4 billion in new commitments over the weekend but needs to reach $12 billion by Dec. 6.
PG&E has been trying to come up with a viable restructuring plan since it went bankrupt in the face of $30 billion in liabilities tied to blazes that its power lines sparked across Northern California in 2017 and 2018. But reaching an agreement over compensation for fire victims has proven a challenge, and California Governor Gavin Newsom has threatened a government takeover if the company fails to strike a deal.
PG&E said previous financial commitments signed by investors were subject to bankruptcy court approval by this Wednesday, which has forced the company to collect new pledges. The new ones being signed are subject to a Dec. 20 deadline for court approval, buying the company more time to negotiate with victims.
“The terms have changed, and there may be people who are resisting the change,” Kit Konolige, a utilities analyst with Bloomberg Intelligence, said in an interview. “Some people are comfortable with that, and others might not be.”
Several of PG&E’s previous backers are missing from the list of current ones that the company filed Monday, including multiple Fidelity funds, Soros Fund Management LLC and the D.E. Shaw Galvanic Portfolios. PG&E had more than 100 commitments last month. Now it has just over 20.
PG&E said in a statement that it believes it’s still “on track” in getting a restructuring plan confirmed before a June 30, 2020, deadline set by California lawmakers. The utility said it’s “engaged in constructive discussions” with wildfire victims.
The company’s shares were down 4.4% at $7.10 at 3:36 p.m. in New York.
New language in the financial commitments signed over the weekend raises the cap on PG&E’s potential wildfire-related liabilities to $25.5 billion, up from $18.9 million. That roughly matches the amount that PG&E was said to be offering to victims in negotiations earlier this month and may signal that the two sides are closer to an agreement.
The latest terms of the financial commitments may also make it more difficult for investors to walk away from their pacts.
PG&E is seeking a total of $12 billion in financing now, $2 billion less than its previous target. The company said it expects to use some tax savings related to wildfire claims payments to help fund its reorganization plan, reducing the amount of backstop commitments it needs.
--With assistance from Mark Chediak, Steven Church and Scott Deveau.
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