PG&E announces $34.4B in debt financing heading into 2nd round of exclusivity fight

Dive Brief:

Pacific Gas & Electric (PG&E) has lined up $34.4 billion in debt financing to support its reorganization plan, the company told the U.S. Bankruptcy Court for the Northern District of California on Friday.
Bloomberg reports the financing comes from banks including JPMorgan Chase & Co. The utility filed for bankruptcy in January, and in September outlined a reorganization plan that included $17.9 billion to pay wildfire claims. That filing did not include details on funding, and PG&E's creditors have been pushing the court to allow alternate plans to be proposed.
Bankruptcy Judge Dennis Montali will hear arguments on Monday to end PG&E's exclusivity period, when only the utility may propose a plan of reorganization, but he has already rejected creditors once and indicated the bar will be set higher the second time around.

Dive Insight:

When Montali ruled in August that PG&E's reorganization plan would be considered ahead of its creditors', he concluded that competing plans would be a windfall for lawyers and accountants, but not for fire victims. Asked to reconsider, the judge has made clear there must be good reason.

"The issue of termination of exclusivity has recently been fully briefed, argued and decided. There is no need to travel that path again," he wrote in an Oct. 3 order. Montali added that he wants to hear "what has changed in such a short period of time to justify reversing course."

If creditors are allowed to propose their plan, Montali also indicated he is concerned with the impact on other proceedings, including one to estimate PG&E's total wildfire liability. He asked creditors' lawyers to "explain whether their proposed plan should be considered a back-up in case the Debtors' plan cannot be confirmed or whether two competing plans should be allowed to proceed in parallel."

In September, PG&E noteholders proposed injecting $29.2 billion in new money into the utility in exchange for control of the company and new debt. Their proposal includes $14.5 billion to pay fire victims and $11 billion for insurance subrogation claims.

In exchange, noteholders want 59.3% of the reorganized PG&E's outstanding common stock. The utility told the court the proposal would be an "unjustified windfall."