PG&E Corp. is trying to match the $13.5 billion a rival group promised to pay wildfire victims in order to resolve its bankruptcy case, but the company’s funding commitments have dropped by about half.
The company said in a Securities and Exchange Commission filing on Monday that it raising the cap on total wildfire-related claims it could pay to $25.5 billion.
That could pave the way for PG&E to provide $13.5 billion for victims, as a competing plan to resolve the bankruptcy case envisions, because the company already reached an $11 billion settlement with insurance companies and $1 billion with a group of local governments.
But in the same filing, PG&E disclosed that it now has less funding secured for its plan to emerge from protection under Chapter 11 of the U.S. Bankruptcy Code. The company replaced $14 billion in financial commitments it had lined up with new agreements that will provide $7.4 billion in proceeds. PG&E said it’s seeking to get another $4.6 billion in place by Dec. 6.
PG&E’s prior deal with investors sought court approval by Nov. 20, but the new ones say the company has until Dec. 20, after which investors could terminate their agreements if U.S. Bankruptcy Judge Dennis Montali has not authorized them. Montali previously ordered the company into mediation with attorneys for bondholders and fire victims who have their own plan to resolve the case.
Shares of PG&E closed at $7.07, down 4.7%, on Monday.
PG&E’s original plan to pay fire claims and resolve the bankruptcy case envisioned creating a trust of $8.5 billion from which the remaining claims of individual victims would be paid. But fire victims were not satisfied, and they teamed up with a group of bondholders to present their own plan that would have $13.5 billion to pay victims.
The company said in its securities filing that it would file a revised reorganization plan that includes the hedge funds Abrams Capital Management and Knighthead Capital Management as proponents. Abrams and Knighthead collectively own 7.44% of PG&E’s stock, according to data compiled by Bloomberg.
Bloomberg News reported last week that PG&E was willing to match the $13.5 billion offered in the rival plan but was still determining how to structure it, particularly regarding the mix of cash and stock.
PG&E spokesman James Noonan said in an email that the company is committed to paying victims, protecting its customers and placing utility subsidiary Pacific Gas and Electric Co. “on a path to becoming the energy company our customers expect and deserve.” The company’s plan achieves that goal, he said.
“As we have said from the beginning, our plan will continue to be updated as developments require, including to reflect any additional settlements or the outcome of the ongoing wildfire claims proceedings,” Noonan said in the email.
An earlier version of the story misstated PG&E’s funding commitments.
The “strong financial backing” PG&E bolstered over the weekend makes the company on track to have its plan confirmed ahead of the June 30 deadline set by a new state law, Noonan said. PG&E officials “remain engaged in constructive discussions with individual wildfire claimants and their representatives,” he said.
A spokesman for the official committee of fire victims involved in the bankruptcy case had no comment. Fire victims have until Dec. 31 to file a claim against PG&E as part of the bankruptcy.