PG&E Says it Will File Chapter 11 Bankruptcy
Credit to Author: Darrell Proctor| Date: Mon, 14 Jan 2019 14:06:08 +0000
California utility PG&E Corp. on Jan. 14 gave its workers the state-required 15-day advance notice of its intent to file a Chapter 11 bankruptcy. The company on Monday said its electric and natural gas service to customers should not be impacted during its reorganization, which comes as PG&E faces billions of dollars in liabilities related to the role of its equipment in a series of deadly wildfires over the past two years.
The company late Sunday said that PG&E CEO Geisha Williams had stepped down, with John Simon named interim CEO. PG&E’s board said it would search for a new chief executive with “extensive operational and safety expertise.” Williams had been CEO since 2017. Simon has held various roles with the company since 2007, most recently as executive vice president and general counsel.
PG&E in a news release Monday said the company “and its wholly owned subsidiary Pacific Gas and Electric Company currently intend to file petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on or about January 29, 2019.” The company today filed a Form 8-K with the U.S. Securities and Exchange Commission (SEC), and said additional information is available on the PG&E website.
Today’s action confirms reports from Sunday that the company was set to notify its staff of a bankruptcy filing. The company has said it expects to have about $5.5 billion in financing in place to help ongoing operations during a reorganization.
State fire investigators said they have determined that PG&E’s power lines sparked 18 wildfires in October 2017 that burned nearly 200,000 acres, destroyed 3,256 structures and killed 22 people. Officials also are investigating whether a PG&E high-voltage transmission line was responsible for last year’s Camp Fire, which resulted in 86 deaths and was the deadliest fire in California history.
The company in its filing with the SEC on Monday said its potential liabilities from all the fires combined could exceed $30 billion. It said it was facing about 50 lawsuits related to the Camp Fire on behalf of 2,000 individual plaintiffs, and more than 700 lawsuits involving at least 3,600 plaintiffs in connection with the wildfires in 2017.
The company said: “PG&E expects that the Chapter 11 process will, among other things, support the orderly, fair and expeditious resolution of its potential liabilities resulting from the 2017 and 2018 Northern California wildfires, and will assure the Company has access to the capital and resources it needs to continue to provide safe service to customers.” PG&E said it expects to meet its payroll and benefits obligations to employees.
Simon, the interim CEO, said: “The people affected by the devastating Northern California wildfires are our customers, our neighbors and our friends, and we understand the profound impact the fires have had on our communities and the need for PG&E to continue enhancing our wildfire mitigation efforts. We remain committed to helping them through the recovery and rebuilding process. We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion. We expect this process also will enable PG&E to access the capital and resources we need to continue providing our customers with safe service and investing in our systems and infrastructure. Everyone at PG&E knows that our single most important responsibility is safety, and we recognize that we must work even harder every day to demonstrate that the safety of our customers, our communities, our employees and our contractors comes first.”
Richard C. Kelly, PG&E Corp.’s chairman of the board, said, “Following a comprehensive review with the assistance of our outside advisors, the PG&E Board and management team have determined that initiating a Chapter 11 reorganization for both the Utility and PG&E Corporation represents the only viable option to address the Company’s responsibilities to its stakeholders. Our goal will be to work collaboratively to fairly balance the interests of our many constituents—including wildfire victims, customers, employees, creditors, shareholders, the financial community and business partners—while creating a sustainable foundation for the delivery of safe service to our customers in the years ahead. The Chapter 11 process allows us to work with these many constituents in one court-supervised forum to comprehensively address our potential liabilities and to implement appropriate changes.”
The company said it expects the reorganization will:
- Enable continued safe delivery of natural gas and electric service to PG&E’s millions of customers.
- Support the orderly, fair and expeditious resolution of PG&E’s potential liabilities resulting from the 2017 and 2018 Northern California wildfires.
- Enable PG&E to continue its extensive restoration and rebuilding efforts to assist communities affected by the 2017 and 2018 wildfires in Northern California.
- Allow the company to work with regulators and policymakers to determine the most-effective way for customers to receive safe natural gas and electric service for the long-term in an environment that continues to be challenged by climate change.
- Assure the company has access to the capital and resources necessary to support ongoing operations and enable PG&E to continue investing in its systems, infrastructure and critical safety efforts, including investing in its Community Wildfire Safety Program, an additional precautionary safety measure implemented following the 2017 Northern California wildfires to further reduce wildfire risk.
The company in its news release said it “has engaged in discussions with potential lenders with respect to Debtor-in-Possession (DIP) financing.” It said it “expects to have approximately $5.5 billion of committed DIP financing at the time it files for relief under Chapter 11 on or about January 29, 2019, and has received highly confident letters from a number of major banks. The DIP financing will provide PG&E with sufficient liquidity to fund the Company’s ongoing operations, including its ability to provide safe service to customers.”
Kelly in a statement Sunday said he supported Simon as the choice for interim CEO. “While we are making progress as a company in safety and other areas, the Board recognizes the tremendous challenges PG&E continues to face,” Kelly said. “We believe John is the right interim leader for the company while we work to identify a new CEO.”
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).
The post PG&E Says it Will File Chapter 11 Bankruptcy appeared first on POWER Magazine.