Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on January 29, 2019, PG&E Corporation (the “Corporation”) and its subsidiary, Pacific Gas and Electric
Company (the “Utility,” and together with the Corporation, the “Debtors”), filed voluntary petitions for relief under chapter 11 of title 11 (“Chapter 11”) of the United States Code in the U.S. Bankruptcy Court for the Northern District of California
(the “Bankruptcy Court”). The Debtors’ Chapter 11 cases are being jointly administered under the caption In re: PG&E Corporation and Pacific Gas and Electric Company, Case No. 19-30088 (DM) (the “Chapter 11 Cases”). On September 23, 2019, the
Debtors filed a First Amended Joint Chapter 11 Plan of Reorganization (as may be further amended, modified or supplemented from time to time, the “Proposed Plan”).
As previously disclosed, the Corporation has separately entered into Chapter 11 Plan Backstop Commitment Letters with each of the
entities set forth in Schedule I to Exhibit 10.1 of the Debtors’ Form 8-K dated September 30, 2019 (each, a “Backstop Commitment Letter”), which severally provide for the funding of up to an aggregate of $14 billion of equity proceeds to the
Corporation on the effective date of the Proposed Plan to finance the transactions contemplated thereby, subject to the terms and conditions set forth in each Backstop Commitment Letter.
In connection with the Proposed Plan, on October 11, 2019, the Debtors entered into debt commitment letters (the “Debt Commitment
Letters”) with JPMorgan Chase Bank, N.A., Bank of America, N.A., BofA Securities, Inc., Barclays Bank PLC, Citigroup Global Markets Inc., Goldman Sachs Bank USA, Goldman Sachs Lending Partners LLC and any other lenders that may become parties to the
Debt Commitment Letters as additional “Commitment Parties” as provided therein (the foregoing parties, collectively, the “Commitment Parties”), pursuant to which the Commitment Parties committed to provide $34.35 billion in bridge financing in the
form of (a) a $27.35 billion senior secured bridge loan facility (the “OpCo Facility”) with the Utility or any domestic entity formed to hold all of the assets of the Utility upon emergence from bankruptcy (the Utility or any such entity, the “OpCo
Borrower”) as borrower thereunder and (b) a $7.0 billion senior unsecured bridge loan facility (the “HoldCo Facility,” and together with the OpCo Facility, the “Facilities”) with the Corporation or any domestic entity formed to hold all of the assets
of the Corporation upon emergence from bankruptcy (the Corporation or any such entity, the “HoldCo Borrower”) as borrower thereunder, subject to the terms and conditions set forth therein. The commitments under the Debt Commitment Letters will
expire on August 29, 2020, unless terminated earlier pursuant to the termination rights described below.
Borrowings under the OpCo Facility would be senior secured obligations of the OpCo Borrower, secured by substantially all of the assets
of the OpCo Borrower. Borrowings under the HoldCo Facility would be senior unsecured obligations of the HoldCo Borrower. The OpCo Borrower’s obligations under the OpCo Facility, and the HoldCo Borrower’s obligations under the HoldCo Facility, would
not be guaranteed by any other entity. The scheduled maturity of each of the Facilities would be 364 days following the date the Facilities are funded. The Debtors will pay customary fees and expenses in connection with obtaining the Facilities.
The Commitment Parties’ funding obligations under the Debt Commitment Letters are subject to numerous conditions and termination rights,
including, among others, certain conditions and termination rights similar to those included in the Backstop Commitment Letters, in addition to conditions that are not in the Backstop Commitment Letters, including (a) the delivery of specified
financial information, (b) the Corporation’s receipt of at least $14.0 billion of proceeds from the issuance of equity, of which up to $2.0 billion may take the form of preferred equity, equity-linked securities or securitizations to the extent not
negatively impacting cash distributions to the Corporation or distributions that will be available to service debt at the Corporation, (c) the execution of definitive documentation for the Facilities and (d) that the Utility shall have received
investment grade senior secured debt ratings. In addition, the Debt Commitment Letters are subject to approval by the Bankruptcy Court, and the Utility’s ability to borrow under the OpCo Facility is subject to approval by the California Public
Utilities Commission.
In lieu of entering into the Facilities, the Debtors intend to obtain permanent financing on or prior to emergence of bankruptcy in the
form of bank facilities, debt securities or a combination of the foregoing.
The foregoing description of the Debt Commitment Letters does not purport to be complete and is qualified in its entirety by reference to the Debt
Commitment Letters, which are filed as Exhibits 10.1 and 10.2 hereto and incorporated herein by reference.