PG&E Corp. disclosed yesterday that it has entered into a commitment letter for $5.5 billion in debtor-in-possession (DIP) financing from J.P. Morgan Chase & Co., Bank of America Corp., Citigroup Inc. and Barclays PLC ahead of the utility company's planned bankruptcy filing, MarketWatch.com reported. PG&E expects that the DIP financing will provide it with "sufficient liquidity to fund its ongoing operations. The company expects the chapter 11 cases to take about two years. The DIP financing is in the form of a $3.5 billion revolving credit facility, a $1.5 billion term loan and a $500 million delayed draw term loan facility. PG&E's bankruptcy filing comes as it faces more than $30 billion in potential liability related to its role in the recent California wildfires. Read more.
In related news, PG&E Corp. said today that it expected capital expenses of about $6.6 billion in 2019 and $6.9 billion in 2020, Reuters reported. In a filing with the U.S. Securities and Exchange Commission, the company said that it expects to spend between $5.7 billion and $7 billion annually from 2020 to 2023. PG&E expects capex to be about $6.5 billion for fiscal 2018. Read more.
Also, consumer activist Erin Brockovich, who famously took on Pacific Gas & Electric Co. in the 1990s, urged California lawmakers yesterday not to let the utility go bankrupt because it could mean less money for wildfire victims, the Associated Press reported. PG&E announced last week it plans to file for chapter 11 bankruptcy because it can't afford to pay at least $30 billion in expected damages due to deadly 2017 and 2018 Northern California wildfires. California law makes utilities entirely liable for damage caused by wildfires sparked by their equipment, even if the utility isn't found to be negligent. The cause of a 2017 fire that swept through Santa Rosa and the 2018 fire that destroyed Paradise are still under investigation. PG&E is under scrutiny in both cases, and lawsuits have been filed by people who lost their homes and are underinsured or lack insurance. Brockovich is part of the legal team representing victims of the 2017 fires. Under a PG&E bankruptcy, wildfire victims likely won't get all of the money they have sued for, experts have said. Brockovich and Noreen Evans, a former state lawmaker representing wildfire victims, suggested the legislature should allow PG&E to take out state-backed bonds to cover the costs of the 2018 fire and potentially pass some costs to ratepayers to avoid bankruptcy. Read more.
