SAN FRANCISCO—On Friday, June 5, it was announced that the Pacific Gas and Electric Company (PG&E), California’s largest utility corporation headquartered in San Francisco, is putting together $11 billion of debt financing as it gets ready to head out of bankruptcy.
After this news broke, PG&E stock shares went up to $13.34, an increase of over 12%.
Following a series of wildfires in Northern California that had been linked to the company’s equipment, PG&E confronted $30 billion in liability charges. As a result, the company filed for Chapter 11 bankruptcy on the morning of Tuesday, January 29, 2019.
The debt financing package announced Friday will be composed of high-yield bonds, an investment-grade bond, and a term loan.
The company’s decision to take on this debt is part of its larger “Plan of Reorganization,” to get itself on a path to a timely Chapter 11 exit. One element of its reorganization plan was to pay billions of dollars in settlement to individual victims, governments, and private companies that were affected by the wildfires. The plan was approved by the California Public Utilities Commission on May 28.
With this debt financing package, the company remains on track to exit bankruptcy and in light of that, it has been working to improve safety precautions related to its equipment.
PG&E released a statement on Thursday, June 4, laying out its “Community Wildfire Safety Program,” which it has been developing amid the COVID-19 pandemic. The program includes infrastructural updates like “stronger poles, covered lines and targeted undergrounding,” as well as the installation of more weather stations and cameras.
Regarding these improvements, PG&E Senior Vice President of Electric Operations Michael Lewis said, “Wildfire season is upon us, and the public can be assured of PG&E’s unwavering efforts to improve public safety and further reduce wildfire risk.”