PG&E offers $18 bln in to settle wild fire claims
Bankrupt PG&E has offered almost $18 billion in compensation to the people affected by wildfires caused by failure in its infrastructure.
Daisy Nguyen had the news for the AP:
PG&E Corp. proposed Monday to resolve its bankruptcy case by offering nearly $18 billion to settle claims from devastating wildfires started by its equipment in recent years — an amount immediately criticized by victims who said less than half of that is intended for them.
The preliminary plan filed in federal court is part of its effort to exit from Chapter 11 bankruptcy protection by next year.
PG&E sought the protection in January because it said it could not afford billions in damages from wildfires in 2017 and 2018 that were caused by company equipment, including a November fire that killed 86 people and largely destroyed the Northern California town of Paradise.
The company said in court papers it was confident it could raise more than $30 billion in debt and equity financing from the largest banks in the nation. The strategy would not result in rate increases for its customers, PG&E said.
“Under the plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California’s clean energy goals,” CEO and President Bill Johnson said in a statement.
Bloomberg’s Steven Church and Mark Chediak reported:
The proposal is “a fraction of what wildfire victims would need to rebuild their lives,” said Patrick McCallum, who co-chairs a group representing victims of blazes that PG&E’s equipment has been blamed for sparking. The fires destroyed tens of thousands of structures across Northern California in 2017 and 2018, killed more than 100 people and buried the company in so many legal claims it was forced to file for Chapter 11 in January.
The plan PG&E submitted in federal court on Monday kicks off the most contentious phase yet of a bankruptcy that has already attracted some of the biggest names in the financial world, including Pacific Investment Management Co. and Elliott Management Corp. Since the company’s collapse — what has been described as climate change’s largest financial casualty to date — wildfire victims, state politicians, activist investors and ratepayer advocates have clashed over the future of the company.
PG&E Chief Financial Officer Jason Wells described the company’s plan on Monday as a “crucial step in a multistep process” and said it may eventually be revised, depending on what the courts find the company legally responsible for paying.
Dale Kasler from the Sacramento Bee quoted Wells as saying:
The proposal “is rate-neutral for customers,” he added, and is designed to lift PG&E out of bankruptcy by next June 30. That’s the deadline set by the Legislature to make PG&E eligible to participate in an insurance fund to pay claims for future wildfires.
But it’s the existing wildfire liabilities that loom as PG&E’s biggest hurdle to getting out of bankruptcy.
PG&E filed its reorganization plan just days after the Legislature postponed, at least until January, action on a bill that would have given PG&E access to low-interest, tax-free state bonds to raise money for wildfire claims. The bill, AB 235, would have given PG&E a big advantage over the hedge funds trying to take the company over.
Despite that defeat, the company has alternative funding sources. In court papers filed Monday, the company said its major shareholders — a separate group of hedge funds that control about half of PG&E’s stock — are prepared to inject up to $14 billion into the company.
In addition, the company said it is confident it can borrow up to $25 billion through private sources, and supplied the court with letters from major investment banks Barclays Capital and Citigroup saying they can line up the financing.
Over the weekend, PG&E rebuffed an offer by its hometown, the city of San Francisco, to buy PG&E’s electrical operations in the city for $2.5 billion. However, the utility said it’s willing to discuss the issue with the city.