PG&E Corp preparing $11 billion debt financing: investor
Package will consist of high-yield bonds and term loans
California utility PG&E Corp is preparing an $11 billion debt-financing package as it prepares to exit from its bankruptcy, an investor involved with the company's funding plan said on Friday, sending its shares up more than 12 percent in intraday trading before closing up 5 percent.
PG&E CRITICS URGE JUDGE TO REJECT UTILITY'S BANKRUPTCY PLAN
PG&E's debt financing package, which will consist of high-yield bonds and term loans, is part of the company's previously announced plans to raise up to $27 billion in funding from future public offerings, said George Schultze, founder of Schultze Asset Management, which invests in distressed securities.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PCG | PG&E CORP. | 17.07 | +0.07 | +0.38% |
REGULATORS BOOST PG&E'S WILDFIRE FINE TO $2.1 BILLION
Schultze's company is serving as one of the participants in the company's financing plan, which is crucial to PG&E's goal of exiting bankruptcy by June 30 in order to tap a state-backed fund that would help power utilities cushion the hit from wildfires.
"While the company comes out of this slightly overleveraged, it has a strong business and will be able to pay down the debt," Schultze said. "The debt market is so hot right now that I'm sure this offering will be oversubscribed."
PG&E CEO BILL JOHNSON STEPPING DOWN
Most of the remaining $16 billion in proposed future public offerings will be from equity raised - possibly at a discount to where PG&E's peer group is trading at the time of emergence from bankruptcy, Schultze said.
Bloomberg first reported on the debt financing plans on Friday.
PG&E said it was working diligently to obtain approval for its reorganization plan by the bankruptcy court as soon as possible.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Last month, PG&E's Chapter 11 plan was confirmed by the California Public Utilities Commission, bringing the troubled utility a step closer to emerge from bankruptcy and participate in a state-backed wildfire fund.
The regulator had also approved PG&E's request to issue new debt and securities to finance its exit from bankruptcy.
PG&E filed for bankruptcy in January last year, citing potential liabilities exceeding $30 billion from major wildfires sparked by its equipment in 2017 and 2018.