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Bankruptcy Court Approves PG&E's Reorganization Plan

PG&E said Sunday that its plan of reorganization was approved by the Bankruptcy Court on Saturday, June 20, 2020.

PG&E said it has completed the initial stage of its bankruptcy exit financing contemplated in its Plan of Reorganization.

As a result of its Chapter 11 proceedings, PG&E has been able to retire expensive high-coupon debt and replace it with lower cost debt, yielding significant annual savings for customers. These savings are estimated to be about $250 million annually. PG&E will reflect the savings in future customer bills later this year, the company said.

On June 16, the Utility raised $8.925 billion of debt, including about $3.5 billion of long-term debt to finance capital investments.

The remaining $2.4 billion of long-term debt and $3 billion of 2-year debt will be used to fund a portion of PG&E's initial contribution to the AB 1054 wildfire fund and to fund claims at emergence from Chapter 11. Interest expense for these latter items will be paid by shareholders.

On June 18, PG&E priced its debt raise of $4.75 billion, which is expected to close on June 23, subject to customary closing conditions. The cost of this debt will be borne by PG&E shareholders. PG&E has committed to suspend its common dividend until it has recognized $6.2 billion in non-GAAP core earnings, to support a plan for capital investment or to reduce Corporation debt in the coming years.

The lower cost of shareholder-funded debt of roughly $70 million compared to the prior expectations will provide additional flexibility for the company after emergence from Chapter 11, the company said.

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