PCG - PG&E Corporation
| Previous Close | 18.46 |
| Open | 18.24 |
| Bid | 17.79 x 1000 |
| Ask | 17.80 x 3200 |
| Day's Range | 17.65 - 18.28 |
| 52 Week Range | 5.07 - 49.42 |
| Volume | 4,229,238 |
| Avg. Volume | 8,027,053 |
| Market Cap | 9.415B |
| Beta (3Y Monthly) | 0.47 |
| PE Ratio (TTM) | N/A |
| EPS (TTM) | -13.78 |
| Earnings Date | Jul 26, 2019 |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | 2017-09-28 |
| 1y Target Est | 24.09 |
- PR Newswire•2 days ago
PG&E Corporation Schedules Second-Quarter 2019 Earnings Release
SAN FRANCISCO , July 19, 2019 /PRNewswire/ -- PG&E Corporation (NYSE: PCG) plans to report second-quarter 2019 earnings on July 26, 2019 , before the market opens. PG&E Corporation will not be hosting ...
- Bloomberg•2 days ago
In PG&E Battle, Time Is Money and Money Is Time
(Bloomberg Opinion) -- Money talks, but the big question for PG&E Corp. next week is how closely the bankruptcy judge is listening.The battle for the future of the wildfire-prone California utility intensified this week with a fusillade of court filings. To recap, PG&E has an exclusive period until late September to file a proposal to get out of chapter 11. Late last month, though, a group of unsecured bondholders led by Elliott Management Corp., Pacific Investment Management Co., and Davidson Kempner Capital Management called on Judge Dennis Montali to end PG&E’s exclusivity and let the committee begin open negotiations for a plan of its own. Consumer and labor groups, among others, also called for the judge to end exclusivity. Now PG&E has filed its rebuttal, asking the judge to deny the motion. Separately, a group holding subrogated insurance claims filed its own rebuttal, calling on the judge to either maintain current exclusivity or, if he ends it, open it up to all competing plans. A hearing is scheduled for Wednesday.PG&E blasts the bondholders, claiming they have dangled a big theoretical check in public to try to “hijack” the company’s reorganization. Ending exclusivity is unusual, and PG&E says the bondholders’ plan isn’t strong enough to warrant it. Indeed, the very fact that the bondholders filed an amended proposal with some more details – on Thursday, the day PG&E was due to make its own filing, helpfully enough – signals the proposal lacks credibility, PG&E says. PG&E also claims the fact that the bondholders only minimally impair their own unsecured paper – and flip it into secured bonds, thereby likely raising its value upon exit from chapter 11 – shows this is a bad-faith attempt to simply wrest control of the company for maximum gain. The subrogated-claims holders echoed that last point in their own filing.This argument may persuade Judge Montali to give PG&E more time, but it has holes of its own. The bondholders are clearly not in the business of altruism; they’re profit-making concerns after all, just like the equity holders in PG&E pushing for exclusivity to be maintained. Avoiding being seen as rapacious vultures is something for which all such parties must strive. In this respect, the bondholders’ proposal has some questionable optics. These include taking hundreds of millions of dollars of commitment fees for arranging new financing and a pricey 7.5% coupon envisaged for the new unsecured notes. Plus, of course, their plan would net them 85%-95% ownership of the reorganized company.Yet the judge may also take the view that (a) every party seeks the best deal for itself and (b) all such terms are ultimately both tactical and negotiable. Even the proposed bond impairment can be seen as an opening gambit, not set in stone.Above all, the $19 to $20 billion of new equity outlined in the bondholder proposal is hard to ignore, especially as there is no other number competing with it yet. As I wrote here, the judge has to ensure PG&E exits chapter 11 with as much of a financial cushion as possible to deal with California’s growing climate-change related risk of large wildfires. Fresh money is fresh money, even if it comes at the expense of existing shareholders – which is hardly unusual in a bankruptcy anyway.And this plan certainly would come at existing shareholders’ expense. Even using the more moderate $19 billion proposal, the implied stock price for PG&E is just $6.34, a 65% discount to the current level. A back-of-the-envelope valuation of a post-chapter 11 PG&E implies a haircut of almost half for existing shareholders versus the current market capitalization.(1)One interesting aspect of the PG&E filing is that it says the $31 billion or so of funding outlined in the bondholders’ term sheet isn’t adequate versus estimated obligations of almost $35 billion. This is designed to portray the proposal as not serious or worthy of terminating exclusivity. Yet the gap of less than $4 billion, or 12%, could also be read as being eminently bridgeable for deep-pocketed institutions, especially considering these numbers are effectively a first pass before the opposing parties have really talked.This also highlights the other elephant in the courtroom: the size of the claims themselves. The subrogation committee’s objection to the bondholders’ plan rests largely on the position that it doesn’t come anywhere near to adequately compensating victims of the Tubbs Fire of 2017. This is an especially contentious point because CalFire, the state’s Department of Forestry and Fire Protection, determined that fire was likely caused by privately owned electrical equipment, rather than PG&E’s. While many took this as meaning PG&E would avoid paying billions of dollars of Tubbs claims, the subrogation committee states flatly “CalFire got it wrong.” This echoes a similar argument made by the committee of tort claimants, which favors ending PG&E’s exclusivity but doesn’t back the bondholder proposal.At its extreme, Tubbs represents a swing factor in the liabilities facing PG&E that is bigger than the current market cap. That would present a complication for bondholders and equity-holders alike; but the bottom line is that, alongside PG&E’s claim of a funding mismatch, the argument for an infusion of fresh equity only gets stronger. Indeed, the subrogation committee, without giving details, proposes a rights offering. And PG&E’s own proposal talks of “a substantial infusion of cash raised from existing equity holders on market terms or in the capital markets if available on better terms”. PG&E still holds out the prospect of new securitized bonds also playing a role, although there’s little sign thus far of Sacramento having any appetite for backing that.In the background, the clock is ticking toward the June 2020 deadline to get PG&E out of bankruptcy so it can participate in California’s new wildfire fund. The fact that legislation was only passed recently may strengthen PG&E’s case that it’s making progress but needs more time. Even so, the existence of a competing proposal with actual numbers can’t be ignored. And whatever the judge decides on Wednesday, this latest skirmish should remind investors about the scale of PG&E’s potential liabilities – and the corresponding risk of substantial dilution. (1) This assumes a regulatedasset base of $40 billion with a 52% equity component;an allowed return on equity of 10.9%;a deduction of PG&E's upfront wildfire mitigation costs under California's recently-enacted AB 1054; and an earnings multiple of 17 times.To contact the author of this story: Liam Denning at ldenning1@bloomberg.netTo contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Zacks•3 days ago
Earnings Preview: PG&E (PCG) Q2 Earnings Expected to Decline
PG&E (PCG) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
- Bloomberg•3 days ago
California Cities Ask Newsom to Remove Hurdles for PG&E Assets
(Bloomberg) -- A new California law, a win for Governor Gavin Newsom, is intended to help utilities cover wildfire liabilities. But it’s also impeding the efforts of cities such as San Francisco that are seeking power independence.Now, they’re pressing Newsom to roll back the obstacles the law created before the state legislative session ends in September.Newsom signed a bill July 12 that helps utilities cover mounting liabilities from wildfires, which led to PG&E Corp.’s bankruptcy in January. Cities such as San Francisco want to buy assets from the bankrupt electricity provider to control the power supply for their communities. An amendment inserted late in the legislative process makes those purchases more difficult by subjecting them to the approval of state regulators.“We need to walk this back,” said State Senator Scott Wiener, who represents San Francisco and voted against the bill. “Cities should have the flexibility to create their own municipal utilities, and we shouldn’t stop them if that’s what a community wants to do.”San Francisco earlier this year envisioned bidding for the PG&E electric assets within months, and other cities have also looked into acquisitions. The South San Joaquin Irrigation District, a water agency in the state’s agricultural region that tried to buy local PG&E poles and wires in 2006 and 2016, plans to make another offer as part of the bankruptcy.PG&E BankruptcyThey need timely action.PG&E may file its bankruptcy plan as soon as next month, according to documents reviewed by Bloomberg. The company aims to exit bankruptcy protection early next year, and San Francisco and others may find bidding for parts of its distribution system is easier during that process. Plus, a group of creditors is pressing for the judge to consider a plan that would prevent any sale of assets to municipal governments for five years.What Bloomberg Intelligence Says“California’s new wildfire legislation has cleared a path for PG&E to reorganize and exit bankruptcy. Yet that path has significant operational and restructuring obstacles and a tight deadline of June 30, 2020”Credit analyst Philip Brendel and litigation analyst Negisa BallukuThe legislation set up a fund that could be as large as $21 billion that power companies can tap to cover future fire liabilities. It also required more stringent safety standards. Credit-rating companies had warned that absent state action, utilities may be cut to junk, increasing their cost of capital and the risk of another energy crisis for California.During the afternoon of July 5, the Friday before a key Monday committee hearing, provisions were added to expand the reach of the California Public Utilities Commission over municipalities attempting to buy PG&E assets. Also, the period that any new owner must maintain the number of employees was increased to three years from two.‘Clean-Up Bill’Municipalities may have some hope. There may be a “clean-up bill” next month that could address their concerns, said Barry Moline, executive director of the California Municipal Utilities Association. A clarification that the intent was for the regulator to “review” rather than approve the impact on employees that could delay municipal plans would be a “good step,” Moline said.San Jose Mayor Sam Liccardo said in an interview that Newsom administration officials have assured his staffers that “they’ll work with us on language that may fix this.”Nothing has been formally announced yet and the legislature is on recess until Aug. 12, leaving a month to pass new laws. A spokesman for PG&E said it doesn’t comment on legislation yet to be introduced.Nathan Click, a spokesman for Newsom, referred to the governor’s comments at the July 12 signing in which he said more work will be done on the wildfire legislation. Newsom said later during the event that he didn’t think “there’s much of an issue” when asked about criticism that the law makes it more difficult to create public utilities. However, in April he characterized government takeovers as something “that drives shivers up people’s spines” should PG&E continue to act poorly.The amendments “set a dangerous precedent by limiting local government autonomy over its own employee relationships,” according to letter dated July 8 from San Jose’s Liccardo, San Francisco Mayor London Breed and Oakland Mayor Libby Schaaf to Newsom and legislative leaders.\--With assistance from Mark Chediak.To contact the reporters on this story: Romy Varghese in San Francisco at rvarghese8@bloomberg.net;David R. Baker in San Francisco at dbaker116@bloomberg.netTo contact the editors responsible for this story: Elizabeth Campbell at ecampbell14@bloomberg.net, Shruti Date Singh, Boris KorbyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Yahoo Finance•5 days ago
Companies to Watch: AT&T and IBM team up, PG&E makes repairs, ConEd explains NYC blackout
IBM, AT&T, ConEd, Charles Schwab and Bayer are the companies to watch.
- Market Realist•5 days ago
PG&E Stock Continued to Slide on July 15
The large swings for PG&E; (PCG) stock may not end anytime soon.
- Motley Fool•6 days ago
Why Callon Petroleum, Teva Pharmaceutical Industries, and PG&E Slumped Today
The indexes didn't make major moves today, but these stocks did.
- Business Wire•6 days ago
PG&E Making Substantial Progress on Wildfire Safety Efforts to Protect Customers, Communities
Pacific Gas and Electric Company (PG&E) continues to make substantial progress toward its Community Wildfire Safety Program (CWSP) goals, intended to mitigate the risk of wildfires and protect customers and communities.
- Market Realist•6 days ago
Top Utilities Fell, Treasury Yields Rose Last Week
The benchmark ten-year Treasury yields continued to rise last week due to better-than-expected economic data.
- Moody's•9 days ago
San Diego Gas & Electric Company -- Moody's affirms San Diego Gas & Electric Company's ratings; outlook remains negative
Moody's Investors Service ("Moody's") today affirmed San Diego Gas & Electric Company's (SDG&E) ratings, including its Baa1 Issuer rating, A2 senior secured rating as well as its P-2 short-term rating.
- Moody's•9 days ago
Southern California Edison Company -- Moody's affirms Edison and Southern California Edison ratings; outlook remains negative
Moody's Investors Service ("Moody's") today affirmed the ratings of Edison International (Edison), including its Baa3 senior unsecured rating, and the ratings of its principal subsidiary Southern California Edison Company (SCE), including its Baa2 senior unsecured rating. Please see below for a complete list of ratings affirmed.
- Reuters•9 days ago
California governor signs bill for $21 bln wildfire fund
California Governor Gavin Newsom on Friday signed a bill approved by lawmakers a day earlier that creates a $21 billion fund to help bankrupt PG&E Corp and the state's other investor-owned utilities cover liabilities arising from future wildfires caused by their equipment. Both chambers of California's legislature rushed this week to approve the bill and send it to Newsom to meet the July 12 deadline demanded by S&P Global Ratings. The credit rating agency had warned it could lower its ratings on the state's two other major investor-owned power providers, Edison International's Southern California Edison and Sempra Energy's San Diego Gas & Electric, absent "concrete actions" by policymakers to reduce credit risks posed by wildfires to the state's utilities.
- Bloomberg•9 days ago
PG&E May Face New Calls to Let Others Craft a Recovery Plan
(Bloomberg) -- Another group of creditors at PG&E Corp. may throw its support behind efforts to end the bankrupt utility’s exclusive right to craft a recovery plan.The official committee of unsecured creditors is expected to endorse a pending motion that would terminate PG&E’s privilege before its scheduled Sept. 26 expiration, and allow others to present alternatives, according to people with knowledge of the matter.The committee plans to meet early next week to finalize their position, said the people, who asked not to be identified because the deliberations are private. No final decision has been made and the committee could still choose not to support the motion.An ad hoc group of creditors, led by Pacific Investment Management Co., Elliott Management Corp. and Davidson Kempner Capital Management, presented a motion last month to end exclusivity immediately so they can offer a competing $47.5 billion restructuring plan that could get PG&E out of bankruptcy by year-end or shortly after.PG&E PlanThey’re seeking to replace PG&E’s proposed $31 billion reorganization plan, which would see it emerge from bankruptcy in March with help from tax-exempt bonds that the state would have to agree to issue. California Governor Gavin Newsom said in an interview on Thursday that he doesn’t support PG&E’s proposal to issue tax-exempt bonds at this point.A hearing on the motion is scheduled for July 24.Representatives for the creditor groups declined to comment. In an emailed statement, the company said the court previously had extended its exclusivity to provide “additional time needed to formulate and negotiate a plan of reorganization that is in the best interests of all stakeholders, and PG&E has made substantial progress.”In Chapter 11 cases, companies typically get an exclusive period to devise a reorganization plan. While it’s unusual for a court to cut it short, this happened when PG&E’s utility -- Pacific Gas & Electric Co. -- went through bankruptcy in the early 2000s.That case was overseen by U.S. Bankruptcy Judge Dennis Montali, who is also overseeing the current case. In May, Montali said he ended the exclusivity in PG&E’s previous reorganization after a viable, competing proposal surfaced.The ad hoc committee has asked him to consider approving their request in late July.Earlier this week, the Utility Reform Network, a consumer advocacy group, threw its support behind the effort of PG&E’s ad hoc unsecured noteholders to end the exclusivity period.\--With assistance from Allison McNeely and Steven Church.To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net;Mark Chediak in San Francisco at mchediak@bloomberg.netTo contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net;Lynn Doan at ldoan6@bloomberg.net;Liana Baker at lbaker75@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg•9 days ago
California Utilities Get $21 Billion Backstop in Newsom Win
(Bloomberg) -- For a leader with grand ambitions of tackling big issues from health care to taking on President Donald Trump, California Governor Gavin Newsom has spent much of his first six months in office bogged down in a crisis at home.Two days after his November election, the state’s deadliest wildfire decimated an entire town, with PG&E Corp.’s equipment blamed as the likely cause. The January bankruptcy of California’s largest utility set off a scramble for Newsom to unite lawmakers, power companies and interest groups in finding a way to cover the billions of dollars in liabilities from devastating blazes.There were moments when the endeavor seemed doomed to failure. In fact, as recently as two weeks ago, things still looked bleak. A July 12 deadline to get a deal approved by the legislature was approaching fast and the votes still were up in the air. But then in the span of a few days, Newsom managed to pull off the biggest legislative victory of his young tenure as governor and, in the process, burnish his credentials as a national political figure.The state Assembly on Thursday overwhelmingly approved a bill that would create a $21 billion fund that power companies can tap to cover future fire liabilities, while limiting the financial obligation of ratepayers and requiring more stringent safety standards. Newsom signed the bill into law Friday in Sacramento, saying it was the result of a long and bipartisan process.Meeting Friday’s deadline was key, with lawmakers headed for a month-long recess and credit-rating companies warning that other California utilities may be cut to junk status in the absence of state action.“It’s good that we passed something before we head into the the teeth of fire season,” Newsom, 51, said in an interview Thursday. “I’m relieved. We’re more prepared than we have been in years but we’re not even close to as prepared as we need to be.”Sweeping PlanNewsom, the Democratic successor to four-term governor Jerry Brown, won election after skewering Trump as “a bully,” branding California as “keeper of the nation’s future” and sketching a sweeping vision of the state’s obligation to lead on climate change while providing affordable housing, education and health care to those left behind amid an unprecedented economic boom. Political observers widely expect his ambitions to include an eventual White House run.But crises at home have felled California political candidates with grand aspirations before. Former Democratic Governor Gray Davis swept into office in 1999 with strong approval ratings and ambitious plans but was ousted in a recall election just four years later after being blamed for an energy shortage that led to blackouts and PG&E’s 2001 bankruptcy filing.While Newsom has been grappling with the latest PG&E bankruptcy, he also took on numerous issues simultaneously, from health care to housing and the death penalty.“He is bucking the conventional political idea that he should only have one or two signature issues,” said Daniel Zingale, an adviser to the governor. “He subscribes to the idea that we are living in times of fierce urgency.”Along the way, Newsom has drawn plenty of criticism. The nonpartisan Legislative Analyst’s Office said his budget, though it projects a $21 billion surplus and sets aside $19 billion in various reserve accounts, misses an opportunity to better protect the state from a downturn. Republicans, a minority in the legislature, decried the expansion of the health-care system to cover undocumented immigrants without fixing the service first.Delegating TasksThe PG&E case illustrated one of Newsom’s governing tactics: delegating others to study and devise solutions. In February, he named a strike team of staff members and outside advisers, chaired by his chief of staff, Ann O’Leary, to review the wildfire liability crisis.After months went by with little publicly visible progress on the utility wildfire issue, though, some lawmakers began to complain. In early June, a poll by the Public Policy Institute of California showed that only a third of state residents approved of how Newsom was handling the situation.“The governor’s office was involved in many things, such as the budget,” said state Senator Bill Dodd, a Democrat whose district was ravaged by utility-spawned wildfires in 2017. “I’m not involved in the budget, I’m involved in wildfires, and I was impatient that this was taking too long.”Newsom said in the interview that he and his staff worked steadily with top lawmakers on the wildfire bill. One especially significant moment, he said, was a March meeting with credit-rating firms at which he and legislative leaders described their plans and asked the companies to refrain from downgrading utilities while the effort was ongoing.Bob Hertzberg, the Democratic Senate majority leader, said Newsom’s staff began talking with him and other legislative leaders about the wildfire issue shortly after the inauguration. The pace of those talks accelerated in recent weeks as the July 12 deadline approached, he said.They resulted in the outlines of the book-length piece of legislation that eventually won final passage, while leaving out priorities such as fire-prevention programs and overhauling state law governing residential and commercial fire insurance, in the interest of meeting the deadline.Newsom said in the interview that he is committed to doing more to address those issues when the legislature returns from recess in August. His recently passed budget contains almost $1 billion for fire- and disaster-mitigation programs.Frenzied TalksA critical part of the effort to move the bill toward passage was gaining support from an array of key constituencies, from fire victims to utility ratepayers and employees. Ana Matosantos, a top Newsom aide who serves as his cabinet secretary, cycled among legislative offices and held briefings in the past two weeks with full caucuses of both the Senate and Assembly, speaking without notes on details of the complex bill, said Dodd and Autumn Burke, a member of the Assembly utilities committee.“We worked closely with the leaders of both chambers as they educated their members,” O’Leary, the governor’s chief of staff, said in an interview. “It was hand-in-glove, making phone calls, meeting with senators and Assembly members.”On Monday, hours before the bill was to get its first big test at a Senate committee hearing, the governor met with a group of wildfire victims including Patrick McCallum, a veteran lobbyist whose Santa Rosa house was destroyed in the 2017 Wine Country fires. Newsom listened intently as they told their stories, McCallum said, then told the group: “I’m doing this so this doesn’t happen to future victims. I will be aggressive with PG&E going forward.”Newsom’s staff sought support from the victims’ group to help persuade lawmakers to support the utility bill, McCallam said. “We made it clear, to get our help, we needed certain provisions, and they met what we felt was needed.”Days of frenzied negotiations, in fact, led to a heavily amended bill that won support from utility labor unions, solar providers and even state Senator Jerry Hill, a longtime PG&E critic whose district was the site of a deadly 2010 explosion involving one of the utility’s gas pipelines. In the interview, Newsom called Hill’s backing “a tipping point” that helped persuade other members to support the legislation.Mayoral CriticismOne change intended to win over labor, an amendment that makes it more difficult for cities to acquire utility assets, angered Bay Area mayors. San Francisco’s London Breed and other area mayors wrote a sharply worded letter to Newsom and legislative leaders, saying that the amendments “set a dangerous precedent.”Here, too, Newsom’s staff worked to prevent the opposition from delaying the bill. After texting back and forth with Matosantos, San Jose Mayor Sam Liccardo said he talked with her by phone, and she agreed to work together “on softening the unintended impact,” Liccardo said.The bill ended up passing in the Senate on Monday by a 31-7 margin. In preparation for Thursday’s final passage vote in the Assembly, Chris Holden, chairman of the utilities committee, criss-crossed the hallways of the capitol building, visiting offices and talking with Assembly members about the urgency of passing a bill. Newsom’s staff continued to make calls until late Wednesday night, the governor said.Dodd, sitting in his capitol office late Tuesday as lobbyists and others lined up outside for meetings with him, pulled out his phone and scrolled through a long chain of text messages he had received from Newsom.“Thanks for all your help with this … big deal,” one read. “Congrats on the vote tonight. Appreciate all the hard work,” read another.(Updates with Newsom signing legislation in fourth paragraph.)To contact the reporters on this story: Jeffrey Taylor in San Francisco at jtaylor48@bloomberg.net;Romy Varghese in San Francisco at rvarghese8@bloomberg.net;Mark Chediak in San Francisco at mchediak@bloomberg.netTo contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Kara Wetzel, Michael HythaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Business Wire•9 days ago
PG&E Introduces Revolutionary Wildfire Monitoring Using Satellite Technology in the Fight against California Wildfires
After several years of testing and development, Pacific Gas and Electric Company (PG&E) has deployed the PG&E Satellite Fire Detection and Alerting System. The Satellite Fire Detection and Alerting System is a state-of-the-science program that incorporates data from the two new GOES satellites, as well as three polar orbiting satellites, to provide PG&E with advanced warning 24/7 of potential new fire incidents. The satellites are operated by the United States' National Oceanic and Atmospheric Administration (NOAA)'s National Environmental Satellite, Data, and Information Service division.
- Bloomberg•10 days ago
PG&E Is Pushing Tax-Exempt Bond Bill for Fire Claims
(Bloomberg) -- PG&E Corp. is lobbying California legislators to allow it to issue tax-exempt bonds to help pay for past and future wildfire claims, according to people familiar with the matter.The bankrupt utility is pushing lawmakers to introduce the legislation next month to allow PG&E to present its $31 billion restructuring plan by Sept. 26, after which stakeholders will be able to submit competing proposals, said the people, who asked not to be identified because the matter is private.PG&E currently intends to file its reorganization plan in August and exit bankruptcy protection in March 2020, according to documents reviewed by Bloomberg.Any bill would need California Governor Gavin Newsom’s sign-off. Newsom, a Democrat, said in an interview on Thursday that he doesn’t support PG&E’s proposal at this time. “That’s not where we are,” Newsom said, noting that some legislators have proposed the idea.Any bill would have to clear the state’s Democratic-controlled Assembly and Senate by the end of the legislative session on Sept. 13 and then be signed by the governor by Oct. 13.A representative for PG&E declined to comment.PG&E shares were down 4.4% to $20.45 at the close in New York. They dropped as much as 2.2% more in after-market trading after Newsom said he didn’t support the plan.Wildfire ClaimsUnder separate legislation approved Thursday, power companies would be able to borrow from a multibillion-dollar fund to pay for future wildfire claims. The measure would also make it easier for utilities to recover the costs from their customers if they meet new, more stringent safety standards.PG&E wouldn’t be able to tap into the fund until it settles claims with past wildfire victims and emerges from bankruptcy by June 30 of next year.“We’re not at this stage entertaining new proposals,” said Ann O’Leary, Newsom’s chief of staff. Once PG&E starts “making serious moves to comply with this plan, sure, we’ll entertain other ways of moving forward, but we’re not presently supporting that,” she said of PG&E’s bond request.The bill being pushed by San Francisco-based PG&E would authorize a state entity to issue about $10 billion in tax-exempt bonds. The tax-exempt status would allow more capital to be raised more quickly, with the debt being securitized by diverting a portion of the company’s earnings over the life of the bonds, the people said.Proceeds EarmarkedAbout $7 billion of the proceeds would be set aside for a $14 billion fund for claims from past wildfire victims, according to the people. Another $3 billion would be earmarked for PG&E’s contributions to the statewide fund, they said.The utility doesn’t believe legislation would be required to raise another $5 billion that would be securitized through $500 million in cost cuts at the utility, the people said.If the bill fails to pass by the September deadline, PG&E is considering raising the capital to help finance part of its reorganization through a rights offering that would allow existing shareholders to buy additional equity in the utility proportionate to their current holdings to avoid dilution, the people said. A rights offering would delay the company’s emergence from bankruptcy, the people said, adding that issuing bonds would be essential for paying wildfire claims expeditiously.Current ProposalPG&E’s proposed restructuring would be funded by $15 billion of securitizations, the issuance of $14 billion in debt and $2 billion in insurance proceeds, according to documents reviewed by Bloomberg.An ad hoc committee of the company’s senior creditors led by Pacific Investment Management Co., Elliott Management Corp. and Davidson Kempner Capital Management is developing an alternative $47.5 billion restructuring plan. That group has asked a bankruptcy judge to end the exclusivity period granted to PG&E through Sept. 26 so it can present its own plan.(Updates with Newsom comments in the fourth paragraph.)\--With assistance from Romy Varghese and Jeffrey Taylor.To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net;Mark Chediak in San Francisco at mchediak@bloomberg.net;Jeffrey Taylor in San Francisco at jtaylor48@bloomberg.netTo contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, ;Liana Baker at lbaker75@bloomberg.net, Michael HythaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters•10 days ago
UPDATE 1-California lawmakers approve legislation for $21 bln wildfire fund
California lawmakers approved legislation on Thursday to create a $21 billion fund to help utilities in the state pay for claims arising from future wildfires sparked by their equipment, tackling a top issue for the state. The approval came after power provider PG&E Corp filed for bankruptcy in anticipation of more than $30 billion in wildfire liabilities. The legislation now goes to Governor Gavin Newsom.
- Bloomberg•10 days ago
California’s Fix for Utility Crisis Depends on Munis, Again
(Bloomberg) -- While California’s wildfire liability crisis can be seen clearly through the stock gyrations of the state’s largest investor-owned electric utilities, it’s the stolid municipal-bond market that stands to solve it. And it would be the second time that it’s come to the aid of California.A centerpiece of Governor Gavin Newsom’s sweeping plan to help the companies cover the mounting costs from wildfires that their equipment keeps igniting is a fund seeded with $10.5 billion in municipal revenue bonds. The fund may expand from being used as a line of credit to a $21 billion insurance pool should the companies agree to make contributions.Tapping municipal-bond investors is how California paid for its efforts to end rolling blackouts during the 2000-2001 energy crisis, sparked by a botched deregulation of electricity markets. It’s also how Florida stopped insurers from leaving the state after Hurricane Andrew devastated coastal communities in 1992. Given the appetite for municipal bonds -- a mainstay of retirement accounts that for the most part fails to draw headline-making trades -- the strategy is likely to prove an effective one for the state when it’s ready to sell the bonds.“California taxpayers’ thirst for supply right now is insatiable. The marketplace would be able to absorb it with no issues whatsoever,” said David Alter, head of municipal bond research at Goldman Sachs Asset Management. “I don’t think they’ll do all $10.5 billion all at once, but in this environment, that wouldn’t be a problem either, frankly.”Legislation passed Thursday seeks to address a multi-billion dollar problem that helped push the state’s biggest utility, PG&E Corp., into bankruptcy in January: Wildfires are increasing in number and severity. And an unusual California doctrine holds utilities liable for wildfires that their equipment sparks, even if they aren’t proven negligent, leaving officials worried about the reliability of power in the most-populous U.S. state. Just weeks into the fire season, utility lines are already sparking blazes.Read more: California Clears Fund to Cover Fire Costs That Engulfed PG&ENewsom’s plan helps investor-owned utilities pay for future wildfire damages by setting up -- at the minimum -- a $10.5 billion fund to act as a line of credit. The state’s Department of Water Resources would issue one or more series of the debt. It would be backed by extending a charge customers are already seeing on their bills from the $11.2 billion in bonds the state sold starting in 2002. That issuance reimbursed California from buying electricity for insolvent utilities hobbled by rising prices and manipulation by Enron Corp. and other companies in the deregulated market.(Corporate bond investors may get a cut of the action if a utility that draws down on the line of credit gets permission to sell so-called recovery bonds. These deals would be backed by a different charge on ratepayers.)Enough YieldThe bill explicitly notes that neither the faith and credit nor the taxing power of the state of California would be pledged to cover debt payments. While details have yet to be fleshed out, the legislation calls for investment-grade ratings.Separately, PG&E is pushing lawmakers for legislation that would authorize a state entity to issue about $10 billion in tax-exempt bonds, with about $7 billion of the proceeds set aside for a $14 billion fund for claims from past wildfire victims. Another $3 billion would be earmarked for PG&E’s contributions to the statewide fund, according to people familiar with the matter.The tax-exempt status would allow more capital to be raised more quickly, with the debt being securitized by diverting a portion of the company’s earnings over the life of the bonds, the people said.While the municipal market is different today than it was 20 years ago, one aspect is still true: Californians flock to tax-free income because of the state’s high taxes on the wealthy. A 2002 sale of the bonds saw good demand, according to Bloomberg reports at the time. It’s accentuated now because of the low supply of bonds, due to a variety of reasons, including the federal tax overhaul that also resulted in a cap of state and local deductions. Yields on bonds issued by the state and many local governments are in line or below those for top-rated debt.Craig Brothers, a senior portfolio manager at Bel Air Investment Advisors in Los Angeles, said the fact that the issuance is to cover wildfire costs may give investors pause. Fires are an annual occurrence, while East Coast governments have issued bonds after hurricanes, discrete natural disasters, he said.Still, he said, any debt, particularly those issued now in California, could draw buyers with enough compensation. “If they give enough yield, that may cause people to overlook the flaws of the concept,” Brothers said. “They can probably tempt people to overlook strict credit analysis with yield.”Related: PG&E Customers Still Paying for Crisis That Led to Its Last Bust\--With assistance from Mark Chediak and Scott Deveau.To contact the reporters on this story: Romy Varghese in San Francisco at rvarghese8@bloomberg.net;Danielle Moran in New York at dmoran21@bloomberg.netTo contact the editors responsible for this story: Elizabeth Campbell at ecampbell14@bloomberg.net, Michael B. MaroisFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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