Pacific Gas & Electric has ensured its transition into Chapter 11 bankruptcy reorganization by securing $5.5 billion in debtor-in-possession (DIP) financing for what it expects will be a two-year process.
The San Francisco-based utility holding company entered into the DIP with JPMorgan Chase Bank, Bank of America, Barclays and CItiGroup Global Markets, according to its filing with the U.S. Securities and Exchange Commission. PG&E expects its capital expenditures to total approximately $13.5 billion over the next two years.
“PG&E expects that the DIP Facilities will provide it with sufficient liquidity to fund its ongoing operations, including its ability to provide safe service to customers during the Chapter 11 cases,” reads the SEC filing. “PG&E currently expects the Chapter 11 cases to take, subject to satisfaction of certain terms and conditions, approximately two years, but as described above, the DIP Facilities provide for an extension of one-year exercisable by the Utility at its option.”
The Chapter 11 filing should come on or about Jan. 29, according to an earlier SEC filing. The utility is facing bankruptcy in the wake of alleged liabilities for the 2017 and 2018 wildfires in northern California.
In December, federal prosecutors said that state investigations blamed Pacific Gas & Electric power lines for some fires in October 2017. Investigators also found evidence that state law was violated.
A U.S. judge in 2017 put PG&E on five years of probation following its conviction on pipeline safety charges stemming from an explosion of one of its pipelines in the San Francisco Bay Area.
The filing by prosecutors came after a judge overseeing the pipeline case asked PG&E to explain any role it may have played in a massive wildfire in late 2018 that leveled the Northern California town of Paradise and killed at least 86 people.
Investigators have not determined the cause of the wildfire that began Nov. 8, but speculation has centered on PG&E, which reported an outage around the time and place that the fire ignited.
PG&E also filed for Chapter 11 reorganization after the California electricity market crisis of the early 2000s. It emerged from that bankruptcy in 2004.