Through Judy Lin, CalMatters
In the midst of a pandemic, Gov. Gavin Newsom on Friday signed Pacific Gas and Electric Corp’s $ 57.65 billion bankruptcy reorganization plan. the largest public service in the state.
The company has agreed to a number of changes, including the absence of dividends to shareholders for three years and new monitoring and enforcement mechanisms to redirect PG&E if it does not meet safety or climate change targets. . The deal marks the end of a year-long battle with a governor who threatened a public takeover unless the leaders have changed the corporate culture and the investors have accepted a financial discount.
PG&E chief executive and chairman Bill Johnson said the company now hopes to emerge from Chapter 11 bankruptcy in a timely manner. Under state law, PG&E must do so by June 30 to access a $ 21 billion public fund to compensate victims of wildfires, which is a key part of its Financial plan.
“We are now waiting for the California Public Utilities Commission to approve the plan through its established regulatory process, so that we can move out of Chapter 11, pay wildfire victims fairly and as soon as possible, and participate in the process. state forest firefighting fund, “Johnson said in a writing declaration.
PG&E filed for bankruptcy in January 2019, after being held financially responsible for a series of deadly and destructive forest fires in 2017 and 2018. Although many victims, insurers and bondholders signed a reorganization plan, Newsom was the last hurdle, fearing it would leave the company with too much debt and not enough change.
In previous objections, he had asked the company to oust its board and replace it with a majority of Californians, including utility safety experts. Newsom also wanted a provision that the license to operate the company would be transferred to the state or a third party when needed.
After months of backstage wrangling, the two sides agreed to a number of changes, including:
- No dividends to be paid to shareholders for the next three years, which represents approximately $ 4 billion lost.
- About $ 7.6 billion in shareholder assets would be used to repay or refinance utility debt.
- A board of directors and a management team are in place and will prioritize safety.
- State regulators gain greater oversight and enforcement powers.
- A state observer will monitor PG & E’s security objectives before the company goes out of bankruptcy.
- A transition agent will be appointed if the bankruptcy process is delayed.
“This is the end of business as usual for PG&E,” Newsom said in a written statement.
“Thanks to California’s unprecedented bankruptcy intervention, we got a totally transformed board and management structure for the company, real accountability tools to ensure safety and reliability and billions additional contributions from shareholders to ensure that security upgrades are made, ”the governor said.
In addition, the state will have the legal power to demand further changes. “We are not taking our foot off the accelerator,” Newsom said.
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