PG&E’s $59 Billion Restructuring

Milbank has successfully represented the Official Committee of Unsecured Creditors of PG&E Corporation and its regulated utility subsidiary Pacific Gas and Electric Company. Davis Polk also advised on the deal. Hunton Andrews Kurth LLP also advised PG&E Corporation and its utility subsidiary Pacific Gas and Electric Company on the deal.

As the largest utility in California, Pacific Gas and Electric Company (NYSE: PCG) (the “Utility”) services approximately 16 million people throughout a 70,000-square-mile area through a massive transmission network comprised of 106,681 circuit miles of electric distribution lines, 18,466 circuit miles of interconnected transmission lines, 42,141 miles of natural gas distribution pipelines and 6,438 miles of transmission pipelines.

PG&E filed for chapter 11 bankruptcy protection on January 29, 2019 in the US Bankruptcy Court for the Northern District of California. PG&E’s chapter 11 cases were necessitated by the catastrophic and tragic wildfires that occurred in Northern California in 2017 and 2018, and PG&E’s potential liabilities arising therefrom, which the Debtors asserted could exceed $30 billion, without taking into account potential punitive damages, fines and penalties or damages with respect to future claims.

On May 22, 2020, the Debtors, certain funds and accounts managed or advised by Abrams Capital Management, L.P., and certain funds and accounts managed or advised by Knighthead Capital Management, LLC filed the Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court.

On May 26, 2020, the Utility entered into a commitment letter with JPMorgan Chase Bank, N.A. and the other commitment parties party thereto pursuant to which the Utility Term Loan Commitment Parties have agreed, subject to the terms and satisfaction or waiver of the conditions contained therein, to provide an up to $6,000,000,000 term loan credit facility to the Utility. As previously disclosed, on June 19, 2020, the Utility issued $8,925,000,000 aggregate principal amount of its First Mortgage Bonds. As a result of such issuance, on June 19, 2020, the Utility delivered notice pursuant to the Utility Term Loan Commitment Letter of the permanent reduction of the aggregate commitments under the Utility Term Loan Facility by $3,000,000,000. Accordingly, the commitments outstanding under the Utility Term Loan Credit Facility after such reduction are $3,000,000,000.

On June 20, 2020, the Court approved PG&E’s $59 billion reorganization plan, which involves issuing new debt and equity to help pay for $25.5 billion in wildfire-related claims. On June 23, 2020, the Corporation obtained a $2.75 billion secured term loan under a term loan credit agreement with JPMorgan Chase Bank, N.A., the other lenders from time to time party thereto, JPM, as administrative agent and as collateral agent.

Unsecured creditors who were constituents of the committee will be paid in full.

PG&E is expected to emerge from bankruptcy in Summer 2020.

PG&E Corporation is a holding company that holds interests in energy based businesses. The Company’s holdings include a public utility operating in northern and central California that provides electricity and natural gas distribution, electricity generation, procurement, and transmission, and natural gas procurement, transportation, and storage.

The Milbank team was led by partners Dennis Dunne (Picture), Gregory Bray, Thomas Kreller (Financial Restructuring) and Andrew Leblanc (Litigation and Financial Restructuring) and included partners Alan Stone (Litigation) and William Bice (Project, Energy and Infrastructure Finance), special counsel Craig Price (Financial Restructuring) and Samir Vora (Litigation), and associates Matthew Koch (Financial Restructuring) and Erin Dexter (Litigation), among other Milbank attorneys.

Davis Polk advised JPM, as administrative agent with a restructuring team including partner Timothy Graulich and associates David Schiff, Omer Netzer and Sharanjit Kaur Sandhu. Partner Joseph P. Hadley provided finance advice.

Davis Polk advised the joint lead arrangers and joint bookrunners – JPMorgan Chase Bank, N.A., Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Citicorp North America, Inc., Goldman Sachs Bank USA, BNP Paribas, Credit Suisse AG, Cayman Islands Branch, Mizuho Bank, Ltd., MUFG Union Bank, N.A., Wells Fargo Bank, National Association, Bank of Montreal, Chicago Branch, The Bank of New York Mellon – with a finance team including partners Jason Kyrwood and Joseph P. Hadley, counsel Benjamin Cheng and associates Phoebe Jin, Yuko Sin and Jeffrey Hon. Counsel Susan D. Kennedy provided real estate advice.

The Hunton Andrews Kurth team included Michael F. Fitzpatrick, Jr., Kevin Felz, Christina Kwon, Patrick Jamieson, Brendan Harney, Margaret Yi, Matthew Hayes, Flavia Vehbiu, Michelle Chan, Ashley Jaber, Shelby Stanton, Charles Matthews, Eric Nedell, Douglas Murphy, John Goswell, Henry Havre, Jerry Chandapillai, Robert Johnson, Christopher Hasbrouck, Ryan Nolan, Mack Watson, Rebecca Hoffman, Shane Wilson, Robert McNamara, Tim Strother, Drew Kintzinger and Jason Harbour.

Involved fees earner: Benjamin Cheng – Davis Polk & Wardwell; Timothy Graulich – Davis Polk & Wardwell; Joseph P. Hadley – Davis Polk & Wardwell; Jeffrey Hon – Davis Polk & Wardwell; Phoebe Jin – Davis Polk & Wardwell; Susan Kennedy – Davis Polk & Wardwell; Jason Kyrwood – Davis Polk & Wardwell; Omer Netzer – Davis Polk & Wardwell; Sharanjit Kaur Sandhu – Davis Polk & Wardwell; David Schiff – Davis Polk & Wardwell; Yuko Sin – Davis Polk & Wardwell; Michelle Chan – Hunton Andrew Kurth; Jerry Chandapillai – Hunton Andrew Kurth; Kevin Felz – Hunton Andrew Kurth; Michael Fitzpatrick Jr. – Hunton Andrew Kurth; John Goswell – Hunton Andrew Kurth; Jason Harbour – Hunton Andrew Kurth; Brendan Harney – Hunton Andrew Kurth; Christopher Hasbrouck – Hunton Andrew Kurth; Henry Havre – Hunton Andrew Kurth; Matthew Hayes – Hunton Andrew Kurth; Rebecca Hoffman – Hunton Andrew Kurth; Ashley Jaber – Hunton Andrew Kurth; Patrick Jamieson – Hunton Andrew Kurth; Robert Johnson – Hunton Andrew Kurth; Andrew Kintzinger – Hunton Andrew Kurth; Christina Kwon – Hunton Andrew Kurth; Charles Matthews – Hunton Andrew Kurth; Robert McNamara – Hunton Andrew Kurth; Douglas Murphy – Hunton Andrew Kurth; Eric Nedell – Hunton Andrew Kurth; Ryan Nolan – Hunton Andrew Kurth; Shelby Stanton – Hunton Andrew Kurth; Tim Strother – Hunton Andrew Kurth; Flavia Vehbiu – Hunton Andrew Kurth; Mack Watson – Hunton Andrew Kurth; Shane Wilson – Hunton Andrew Kurth; Margaret Yi – Hunton Andrew Kurth; William Bice – Milbank; Gregory Bray – Milbank; Erin Dexter – Milbank; Dennis Dunne – Milbank; Matthew Koch – Milbank; Thomas Kreller – Milbank; Andrew LeBlanc – Milbank; Craig Price – Milbank; Alan Stone – Milbank; Samir Vora – Milbank;

Law Firms: Davis Polk & Wardwell; Hunton Andrew Kurth; Milbank;

Clients: Bank of America; Bank of New York Mellon; Barclays Bank; BMO Harris Bank N.A.; BNP Paribas; BOKF National Association; Citibank; Citicorp North America, Inc.; Credit Suisse AG Cayman Islands Branch; Deutsche Bank National Trust Company; G4S plc; Goldman Sachs; International Brotherhood of Electrical Workers, Local 1245 ; JPMorgan Chase & Co.; Mizuho Bank; MUFG Union Bank, N.A.; NextEra Energy, Inc.; Pacific Gas and Electric Company; Pension Benefit Guaranty Corporation; PG&E Corporation; Roebbelen Contracting, Inc; The Davey Tree Expert Compan; Wells Fargo Bank; Western Asset Management Company, LLC;

bank has successfully represented the Official Committee of Unsecured Creditors of PG&E Corporation and its regulated utility subsidiary Pacific Gas and Electric Company. Davis Polk also advised on the deal.

As the largest utility in California, Pacific Gas and Electric Company (NYSE: PCG) (the “Utility”) services approximately 16 million people throughout a 70,000-square-mile area through a massive transmission network comprised of 106,681 circuit miles of electric distribution lines, 18,466 circuit miles of interconnected transmission lines, 42,141 miles of natural gas distribution pipelines and 6,438 miles of transmission pipelines.

PG&E filed for chapter 11 bankruptcy protection on January 29, 2019 in the US Bankruptcy Court for the Northern District of California. PG&E’s chapter 11 cases were necessitated by the catastrophic and tragic wildfires that occurred in Northern California in 2017 and 2018, and PG&E’s potential liabilities arising therefrom, which the Debtors asserted could exceed $30 billion, without taking into account potential punitive damages, fines and penalties or damages with respect to future claims.

On May 22, 2020, the Debtors, certain funds and accounts managed or advised by Abrams Capital Management, L.P., and certain funds and accounts managed or advised by Knighthead Capital Management, LLC filed the Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court.

On May 26, 2020, the Utility entered into a commitment letter with JPMorgan Chase Bank, N.A. and the other commitment parties party thereto pursuant to which the Utility Term Loan Commitment Parties have agreed, subject to the terms and satisfaction or waiver of the conditions contained therein, to provide an up to $6,000,000,000 term loan credit facility to the Utility. As previously disclosed, on June 19, 2020, the Utility issued $8,925,000,000 aggregate principal amount of its First Mortgage Bonds. As a result of such issuance, on June 19, 2020, the Utility delivered notice pursuant to the Utility Term Loan Commitment Letter of the permanent reduction of the aggregate commitments under the Utility Term Loan Facility by $3,000,000,000. Accordingly, the commitments outstanding under the Utility Term Loan Credit Facility after such reduction are $3,000,000,000.

On June 20, 2020, the Court approved PG&E’s $59 billion reorganization plan, which involves issuing new debt and equity to help pay for $25.5 billion in wildfire-related claims. On June 23, 2020, the Corporation obtained a $2.75 billion secured term loan under a term loan credit agreement with JPMorgan Chase Bank, N.A., the other lenders from time to time party thereto, JPM, as administrative agent and as collateral agent.

Unsecured creditors who were constituents of the committee will be paid in full.

PG&E is expected to emerge from bankruptcy in Summer 2020.

PG&E Corporation is a holding company that holds interests in energy based businesses. The Company’s holdings include a public utility operating in northern and central California that provides electricity and natural gas distribution, electricity generation, procurement, and transmission, and natural gas procurement, transportation, and storage.

The Milbank team was led by partners Dennis Dunne (Picture), Gregory Bray, Thomas Kreller (Financial Restructuring) and Andrew Leblanc (Litigation and Financial Restructuring) and included partners Alan Stone (Litigation) and William Bice (Project, Energy and Infrastructure Finance), special counsel Craig Price (Financial Restructuring) and Samir Vora (Litigation), and associates Matthew Koch (Financial Restructuring) and Erin Dexter (Litigation), among other Milbank attorneys.

Davis Polk advised JPM, as administrative agent with a restructuring team including partner Timothy Graulich and associates David Schiff, Omer Netzer and Sharanjit Kaur Sandhu. Partner Joseph P. Hadley provided finance advice.

Davis Polk advised the joint lead arrangers and joint bookrunners – JPMorgan Chase Bank, N.A., Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Citicorp North America, Inc., Goldman Sachs Bank USA, BNP Paribas, Credit Suisse AG, Cayman Islands Branch, Mizuho Bank, Ltd., MUFG Union Bank, N.A., Wells Fargo Bank, National Association, Bank of Montreal, Chicago Branch, The Bank of New York Mellon – with a finance team including partners Jason Kyrwood and Joseph P. Hadley, counsel Benjamin Cheng and associates Phoebe Jin, Yuko Sin and Jeffrey Hon. Counsel Susan D. Kennedy provided real estate advice.

Involved fees earner: Benjamin Cheng – Davis Polk & Wardwell; Timothy Graulich – Davis Polk & Wardwell; Joseph P. Hadley – Davis Polk & Wardwell; Jeffrey Hon – Davis Polk & Wardwell; Phoebe Jin – Davis Polk & Wardwell; Susan Kennedy – Davis Polk & Wardwell; Jason Kyrwood – Davis Polk & Wardwell; Omer Netzer – Davis Polk & Wardwell; Sharanjit Kaur Sandhu – Davis Polk & Wardwell; David Schiff – Davis Polk & Wardwell; Yuko Sin – Davis Polk & Wardwell; William Bice – Milbank; Gregory Bray – Milbank; Erin Dexter – Milbank; Dennis Dunne – Milbank; Matthew Koch – Milbank; Thomas Kreller – Milbank; Andrew LeBlanc – Milbank; Craig Price – Milbank; Alan Stone – Milbank; Samir Vora – Milbank;

Law Firms: Davis Polk & Wardwell; Milbank;

Clients: Bank of America; Bank of New York Mellon; Barclays Bank; BMO Harris Bank N.A.; BNP Paribas; BOKF National Association; Citibank; Citicorp North America, Inc.; Credit Suisse AG Cayman Islands Branch; Deutsche Bank National Trust Company; G4S plc; Goldman Sachs; International Brotherhood of Electrical Workers, Local 1245 ; JPMorgan Chase & Co.; Mizuho Bank; MUFG Union Bank, N.A.; NextEra Energy, Inc.; Pension Benefit Guaranty Corporation; Roebbelen Contracting, Inc; The Davey Tree Expert Compan; Wells Fargo Bank; Western Asset Management Company, LLC;

Author: Ambrogio Visconti