(Bloomberg) – PG&E Corp., which is trying to ward off a group of bonds trying to take control of its bankruptcy, said it has raised $ 34.4 billion in debt financing commitments for its planned reorganization.
The California utility giant has received the commitments from banks including JPMorgan Chase & Co., according to court papers filed Friday. The financing terms are "very superior" in relation to a competing proposal from the bondholder group led by Elliott Management Corp. and Pacific Investment Management Co. proceed with a plan to file for the largest bankruptcy in US history. While the judge overseeing the case has already decided that the San Francisco-based company should retain that control, the bondholder group is fighting to kill the exclusivity so that it can submit a proposal that would only obliterate current shareholders and give creditors a controlling stake
PG&E blasted the group's proposal in Friday's filing, saying it would lead to an "unjustified windfall" of billions of dollars for creditors at the expense of shareholders and utility customers. For example, the plan would restore long-term liabilities to higher market prices, PG&E said.
U.S. Bankruptcy judge Dennis Montali is scheduled to consider arguments over whether the company should retain its exclusivity during a hearing Monday. He signaled that he will put a high barrier for creditors behind the competing $ 29.2 billion restructuring plan, sending PG&E shares up 14% on Friday.
Montali wrote in an order late Thursday that the issue was already "fully informed, argued and decided" when he ruled in August. The lender group will need to explain "what has changed in such a short period of time to motivate reversing the course," he wrote.
The order can provide support to PG&E as it works to close bankruptcy in the middle of next year. The company has been fighting creditors for months as they struggle to balance the interest of taxpayers, shareholders, California regulators and the victims of fires ignited by its equipment. The magazines are what forced PG&E into bankruptcy and saddled it with an estimated $ 30 billion in debt.
PG&E said in its court papers Friday that it has made significant progress toward getting a plan confirmed. It has received more than $ 14 billion in equity obligations and made $ 11 billion with insurance companies and holders of insured claims, including the Baupost Group, which is also a major shareholder. The insurance group said on Friday that it opposed Elliott's effort to allow competing reorganization plans.
Elliott and the Pimco Group propose a restructuring that would pay out $ 25.5 billion to the victims of the wildfires and their insurance companies. A group of light acids has signed up to the plan and supports the creditors' request to abolish PG&E of its exclusivity.
PG&E's application on Friday cited an e-mail exchange between a wildfire lawyer and Elliott to support the company's argument that the two were working for their own interests at the expense of other parties. After being informed by Elliott of a settlement between PG&E and insurance companies, one of the animal's crime victims, Frank Pitre, responded, "Let's do our business and screw them all!", According to the filing.
Pitre said in an email to Bloomberg that he will respond to the PG&E application in court. The lender group declined to comment.
PG&E said that Elliott and fire victims had not provided "any evidence to support the scope of claims that Elliott has undertaken to resolve." The tool reiterated its proposal to conclude with the fire victims to reach a settlement.
Lawyers for the victims of wildfire have expressed frustration at PG&E over having reached a settlement and moved last month to adapt to Elliott and the other farmer holders. PG&E's largest trade union, the official credit union committee that includes power suppliers, and taxpayers' advocates and a special firefighting group for fire victims also supports opening the bankruptcy for competing plans in applications earlier this week.
However, Montali seems doubtful in giving bondholders too much control over the company's way forward, said Katie Bays, a tool analyst for Sandhill Strategy LLC.
"I think the judge is skeptical of taking exclusivity out of PG & E's hands and giving so much influence to the creditors and the damages committee," Bays said. "Just because the creditors and the victims of the fires strike the PG&E does not mean that the exclusive right is removed."
(Updates with comment from attorney in the 11th paragraph)
– Assisted by Scott Deveau and Steven Church.
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