Elliott publicly calls on bankrupt PG&E to revamp reorg plans

The $38 billion hedge fund firm Elliott Management called on Pacific Gas and Electric Company to adopt a long-term sustainable capital structure and fully revamp its board and management team in order to ensure accountability for public safety and benefits to key California stakeholders. Elliot Management Principal Paul Singer/ CC BY-SA 2.0 via Flickr Exerting pressure as one of the largest creditors to the failed utility, Elliott is concerned about executives adhering to wildfire liability legislation passed in California over the summer that requires PG&E to exit from bankruptcy by the end of June 2020 with a plan that meets a number of set standards including a sustainable capital structure and reconstituted board of directors. Elliott criticized officials current plan that it says would only benefit a small number of shareholders. Paul Singer’s Elliott currently holds $1.2 billion in PG&E debt according to press reports, while bond giant PIMCO holds $2.7 billion. In October, PG&E lost it sole control over the reorganization process in bankruptcy court as Elliott and PIMCO were granted the ability to come up with their own competing reorganization plans. According to Elliott, PG&E is now seeking a “rubber-stamp” authorization to proceed with a reorganization plan that fails to meet the legislative guidelines. The hedge fund points out that the current plan would increase PG&E’s debt load to more than $34 billion, which is an increase of $10 billion from its debt when it filed for bankruptcy in January. These moves would likely leave PG&E a junk bond issuer, according to Elliott. The hedge fund explained in a statement to the press that PG&E has now entered into three settlements with wildfire victim, insurance companies and other public entities totaling $25.5 billion. The most recent $13.5 billion settlement with wildfire victims came about as a part of the work of bondholders after the utility offered victims $5 billion less, Elliott officials said. “It is clear that only a reorganization plan that puts PG&E in a meaningfully stronger financial position than when it entered bankruptcy, while compensating wildfire victims fairly and maintaining true rate-neutrality, should be allowed to move forward,” said Jeff Rosenbaum, portfolio manager at Elliott Management, in a statement. He added that the Ad Hoc Bondholder Committee plan would achieve the State of California’s key goals while also making a commitment to PG&E workers to ensure the utility can attract and retain employees in the future.

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