• California Governor Rejects PG&E’s Restructuring Proposal

    California Governor Rejects PG&E’s Restructuring Proposal

    (Bloomberg) -- California Governor Gavin Newsom rejected PG&E Corp.’s proposed restructuring plan on Friday, dealing a major blow to the power giant as it tries to exit the biggest utility bankruptcy in U.S. history.Newsom said in a letter to PG&E Chief Executive Officer Bill Johnson that the utility’s restructuring plan falls “woefully short” of the state’s requirements. The governor said any reorganization of the San Francisco-based power company would require a better financing plan, an entirely new board with a majority from California and the option of a government takeover should PG&E fail to meet safety performance metrics.PG&E’s bankruptcy punctuates “more than two decades of mismanagement, misconduct, and failed efforts to improve its safety culture,” Newsom said in his letter. And its plan to reorganize does not “result in a reorganized company positioned to provide safe, reliable and affordable service to its customers,” he said. Newsom’s support is crucial to PG&E’s restructuring. The company declared bankruptcy in January after its equipment was blamed for starting catastrophic wildfires in 2017 and 2018, including the deadliest blaze in California history. The fires saddled the utility with an estimated $30 billion in liabilities, and it has spent months trying to cobble together a viable restructuring plan as shareholders and bondholders fight for control of it.PG&E, which has until Tuesday to respond and make changes, said in a statement that it believes its current plan meets state requirements and “is the best course forward for all stakeholders.” The San Francisco-based company said it will “work diligently in the coming days to resolve any issues that may arise.”Deal with VictimsThe rejection is a major setback for PG&E just a week after it reached a $13.5 billion settlement to pay victims affected by the fires its equipment caused. A deal with victims had emerged as the company’s largest obstacle in planning a reorganization. Based on a provision in that settlement, the governor had to find that PG&E’s plan complied with state legislation passed in July. The law required PG&E to settle past fire liabilities and resolve its bankruptcy by June if it wants to participate in a newly established wildfire insurance fund and avoid future damages tied to catastrophic fires.Read More: Elliott Bashes PG&E Plan, Says It Would Be Junk-Bond Issuer Newsom’s demands could give activist investor Elliott Management Corp. and Pacific Investment Management Co. another shot at rallying support around a rival restructuring plan. They’re leading a group of bondholders that have offered to inject $20 billion in cash into PG&E in exchange for most of the equity in the company.The bondholders were, in fact, the first to reach a deal with wildfire victims, agreeing to pay them $13.5 billion while PG&E initially proposed just $8.4 billion. But the utility later raised its offer and won over fire victims, announcing the settlement last week.Junk BondsIn a statement Thursday, Elliott said PG&E’s own restructuring proposal would saddle the company with an additional $10 billion in debt, limit its safety investments and turn the utility into a “junk-bond issuer.”In his letter, Newsom similarly raised concerns about the company’s plan to use a combination of debt, secured debt, securitization and monetization of its net operating losses leaving it “with limited ability to withstand future financial and operational headwinds.” He also said the state is focused on meeting the needs of Californians and not “on which Wall Street financial interests fund an exit from bankruptcy.”PG&E described Elliott’s rival plan as “a last-ditch effort to derail the wildfire victims’ settlements, and force costly, uncertain and protracted litigation.” The company said the bondholders’ proposal only stands to “enrich those firms backing it” and said the group would actually charge interest rates on debt that are above market rate.In the hours leading up to Newsom’s letter, PG&E issued statements from fire victims’ attorneys, backing its settlement.Read More: PG&E Could Have Prevented Deadly California Fire, State Says In a rare display of solidarity with the company, consumer advocate Erin Brockovich -- best known for her success in a court case against PG&E over water contamination in the 1990s -- voiced support for the deal, saying it would “fairly and justly compensate wildfire victims in a timely manner.”PG&E’s equipment was identified as the cause of the November 2018 Camp Fire that killed 85 people, burned down tens of thousands of homes and all but destroyed the Northern California town of Paradise.(Updates with PG&E statement in seventh paragraph)To contact the reporters on this story: Steven Church in Wilmington, Delaware at schurch3@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 DoanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters

    California governor rejects PG&E bankruptcy reorganization plan

    The decision by Newsom, sent to PG&E in a letter, complicates the company's push to exit bankruptcy and provide billions of dollars to victims of devastating wildfires in 2017 and 2018 sparked by the utility's power lines. The embattled utility now has until Tuesday to further amend its plan to Newsom's satisfaction, but his criticism of the reorganization package as it was presented by PG&E a day earlier was sweeping.

  • Cities explore electricity options that don't include PG&E
    American City Business Journals

    Cities explore electricity options that don't include PG&E

    Local cities are positioning for a future where Pacific Gas & Electric Co. may not be their electricity provider.

  • Is GTT Communications Inc (GTT) A Good Stock To Buy?
    Insider Monkey

    Is GTT Communications Inc (GTT) A Good Stock To Buy?

    Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren't very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability […]

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  • Moody's

    Fort Bend County Industrial Development Corp -- Moody's upgrades NRG's CFR to Ba1 from Ba2, outlook positive

    Moody's Investors Service ("Moody's") today upgraded NRG Energy, Inc.'s (NRG) Corporate Family Rating (CFR) to Ba1 from Ba2, its senior unsecured rating to Ba2 from Ba3 and its senior secured tax exempt bonds to Baa2 from Baa3. NRG's secured revolving credit facility and senior secured first lien notes were affirmed at Baa3 because they contain a fall-away security provision where the security interest would cease to be effective if two rating agencies raise the company's rating to investment grade.

  • 3 Growth-Focused Cloud Stocks for Tech Investors to Buy for 2020

    3 Growth-Focused Cloud Stocks for Tech Investors to Buy for 2020

    We found three cloud-focused software stocks using our Zacks Stock Screener that investors might want to consider buying for 2020...

  • Andreas Halvorsen's Firm Throws Chewy a Juicier Bone

    Andreas Halvorsen's Firm Throws Chewy a Juicier Bone

    Viking Global enters new, larger position in online pet retailer Continue reading...

  • Why British house prices are expected to climb after sweeping Tory election win

    Why British house prices are expected to climb after sweeping Tory election win

    Boris Johnson’s massive Conservative victory in the general election should give the U.K. property market a much needed boost after months of uncertainty dragged down prices.

  • Barrons.com

    PG&E Is One Step Closer to Getting Out of Bankruptcy

    Pacific Gas and Electric and its holding company PG&E are trying to meet a legislative deadline to gain access to a state fund created to cover future wildfire costs.

  • E*TRADE (ETFC) Up 2.5% as November DARTs, New Accounts Rise

    E*TRADE (ETFC) Up 2.5% as November DARTs, New Accounts Rise

    Steady rise in daily average revenue trades is likely to support E*TRADE's (ETFC) top-line growth.

  • This is where rents have increased the most over the last decade. Hint: It’s NOT New York or San Francisco

    This is where rents have increased the most over the last decade. Hint: It’s NOT New York or San Francisco

    Feel like the rent’s gotten too damn high? Then you might just live in Austin, Texas. Residents in the Lone Star State’s capital saw the biggest increase in the total amount they paid in rent between 2010 and 2019, according to a new report from real-estate company Zillow (ZG) that tallied the total amounts paid by all renters in cities across the U.

  • Bloomberg

    For Once, Erin Brockovich and PG&E Are Fighting On The Same Side

    (Bloomberg) -- Perhaps for the first time ever, Erin Brockovich and PG&E Corp. are on the same side.Brockovich is best known for her success fighting the California utility giant in court over water contamination, a battle later depicted in an Academy Award-winning film starring Julia Roberts. But on late Thursday, she voiced support for a plan by PG&E to compensate the victims of wildfires ignited by its power lines -- a settlement that could help the power company emerge from bankruptcy next year.PG&E distributed Brockovich’s statement as it was fielding criticism from the New York hedge fund Elliott Management Corp., which is pitching a rival restructuring plan for PG&E and has warned that the company’s proposal jeopardizes its long-term health. Elliott and Pacific Investment Management Co. are leading a group of bondholders offering to inject as much as $20 billion in cash into PG&E in exchange for almost all of the company’s equity.As part of PG&E’s restructuring plan, the company agreed last week to pay $13.5 billion to wildfire victims. The deal still needs approval by California Governor Gavin Newsom and the bankruptcy court.“This proposed plan of reorganization and settlements with all the victims meet the Governor’s goals that he’s laid out,” Brockovich said in the statement. “First and foremost, they will fairly and justly compensate wildfire victims in a timely manner. This approach will also enable the company to continue to help meet the state’s climate and clean energy goals.”To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net;Dan Murtaugh in Singapore at dmurtaugh@bloomberg.netTo contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Jasmine NgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters

    California power producer PG&E files amended reorganization plan

    The development comes less than a week after the company said it reached a $13.5 billion settlement with victims of some of the most devastating wildfires in California's modern history. PG&E has settled all major wildfire claims and resolved disputed release provisions between insurance companies and wildfire victims, it said on Thursday. The company also said its plan can be fully funded through its capital structure, including the $12 billion equity backstop commitments that PG&E received last week.

  • Financial Times

    Stockpickers take a starring role when shares collapse

    Blame the rise of passive investing: trillions of dollars of brainless exchange traded funds that exacerbate market swings. Blame regulations: European legislation known as Mifid II that has left smaller companies with less analyst coverage, leaving their shares vulnerable to sudden moves. , the Africa-focused oil explorer, which suffered a 72 per cent share price fall on Monday, wiping more than £1bn from its market value.

  • Is GreenSky, Inc. (GSKY) A Good Stock To Buy?
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    Is GreenSky, Inc. (GSKY) A Good Stock To Buy?

    With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was GreenSky, Inc. (NASDAQ:GSKY). GreenSky, Inc. (NASDAQ:GSKY) was in 15 hedge […]

  • Instant homebuyers, including Zillow and Redfin, trend up in many parts of the country
    American City Business Journals

    Instant homebuyers, including Zillow and Redfin, trend up in many parts of the country

    Compared to the same quarter last year, iBuyers sold homes for less than the year prior. However, the homes sold much quicker.

  • Elliott’s PG&E Plan Aims Carefully at Gavin Newsom

    Elliott’s PG&E Plan Aims Carefully at Gavin Newsom

    (Bloomberg Opinion) -- Looked at one way, Gavin Newsom’s dilemma is actually quite enviable. Choosing which hedge fund you get to disappoint is something many would relish. But the California governor finds himself boxed in on determining what happens next with bankrupt utility PG&E Corp.Newsom must decide whether to support the company’s latest plan to emerge from chapter 11, which includes a revised $13.5 billion settlement agreed last week with wildfire victims. Having also settled with insurance firms for $11 billion and local governments for $1 billion, PG&E has effectively tightened pressure on one of the last remaining stakeholders — sitting in Sacramento — to get on board. In the background, a clock ticks toward the effective June 2020 deadline enshrined in California’s wildfire-fund legislation.On Thursday, Elliott Management Corp., part of the bondholders’ committee pushing a rival exit plan, put a shot across the bow of the company, but it was ultimately also aimed at the governor’s mansion. Elliott lists multiple criticisms of the company’s plan, ranging from implications for PG&E’s governance and culture to the impact on the company’s balance sheet, cash flow and, thereby, ratepayers. Just so Newsom (and his constituents) have the full picture, you understand.One of the interesting items in Elliott’s statement is that it no longer would require the new PG&E to carry debt at the holding-company level. Previously, it had penciled in $5.75 billion that would be replaced with additional equity commitments from several mutual funds, according to people familiar with the plan. PG&E’s own proposal calls for $7 billion. Prior to the wildfires that pushed PG&E into bankruptcy, this debt amounted to just $650 million.This so-called “holdco” debt is different from the $27 billion or so that would be carried by the actual regulated utility assets. As such, it effectively relies on the dividend paid up to the parent by the operating company — an operating company that faces years of high spending to alleviate wildfire risk and, of course, the ongoing risk of those wildfires (albeit with a new insurance fund to mitigate that).Even before Elliott’s announcement it was ditching the holdco debt, Andy DeVries, an analyst at CreditSights, was skeptical as to who would want to buy such paper under either plan, especially at the 4% coupon PG&E had penciled in. He points out that if the $7 billion found buyers at, say, 6%, that would represent a $420 million interest payment versus the operating company’s average dividend payment from 2014-17 of $795 million. Tax-adjusted, the roughly $300 million would absorb 12% of the new PG&E’s net income(1).This gets at one of the main battlegrounds in PG&E’s bankruptcy: the obligations on the emergent company’s cash flows and what this means for existing shareholders, creditors and ratepayers. The bondholders’ committee, including Elliott, has from the start pushed for more expansive payments to victims funded by a lot of new equity, giving it ownership of the company and diluting existing shareholders down to virtually zero. Conversely, the latter have gradually raised their compensation offer to match the bondholders’, but structured with other financing — such as holdco debt or securitized bonds — to help preserve their ownership. The latter’s Achilles heel has always been the prospect of PG&E emerging from chapter 11 burdened with new obligations that exist partly to shield shareholders from the total wipe-out often experienced in a bankruptcy (see this). Nonetheless, last week’s settlement by the company was a serious tactical blow to the bondholders. So their latest move to ditch the holdco element appears designed to once again highlight this issue of post-bankruptcy burdens on PG&E, and give Newsom pause. The feasibility of that holdco debt is doubtful. Possibly, the company hopes it could be replaced or offset at some point either with securitized bonds (although that effort got nowhere over the summer) or even eventual recovery of costs related to the Tubbs Fire via rates, if regulators allowed it.For Newsom, both choices carry risks, not least because both involve some sort of reward for politically unpalatable hedge funds. On the other hand, unless he really plans on pushing for state or municipal ownership — which is no silver bullet — the need for viable public-market financing means he would have to get over that anyway.The bondholders’ plan, if its commitments hold up, still has the benefit of a less-levered utility emerging from chapter 11. On the other hand, the company’s careful assembly of settlements with the main claimants allows it to argue it can get PG&E out of bankruptcy — and off Newsom’s desk — relatively soon. Newsom may try to split the difference by conditioning approval on more concessions from the shareholder group, such as finding a palatable (if dilutive) alternative to that holdco debt. In any case, Elliott’s salvo was aimed with precision.(1) This assumes a $48 billion regulatory asset base, 52% equity financing and 10.25% allowed return on equity.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.

  • Zillow Shows Rising Price Performance With Jump To 85 RS Rating
    Investor's Business Daily

    Zillow Shows Rising Price Performance With Jump To 85 RS Rating

    Zillow shows improving price performance, earning an upgrade to its IBD Relative Strength Rating from 78 to 85.

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    Investor's Business Daily

    Stocks To Watch: Zillow Sees RS Rating Rise To 85

    Zillow saw a welcome improvement to its Relative Strength (RS) Rating on Thursday, with an upgrade from 79 to 85. When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.

  • Hedge Funds Have Never Been More Bullish On BRF Brasil Foods SA  (BRFS)
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