Item 1.03. Bankruptcy or Receivership.
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").
Confirmation of the Plan
On June 19, 2020, the Debtors, certain funds and accounts managed or advised by
Abrams Capital Management, L.P., and certain funds and accounts managed or
advised by Knighthead Capital Management, LLC filed the Debtors' and Shareholder
Proponents' Joint Chapter 11 Plan of Reorganization Dated June 19, 2020 [Docket
No. 8048] with the Bankruptcy Court (as may be amended, modified, or
supplemented, together with all exhibits and schedules thereto, the "Plan"). All
capitalized terms used but not defined herein shall have the respective meanings
ascribed to them in the Plan. The Plan incorporates by reference certain
documents filed with the Bankruptcy Court as part of the "Plan Supplement," as
the same has been amended from time to time prior to confirmation of the Plan
and may be further amended prior to the effective date of the Plan (the
"Effective Date").
On June 20, 2020, the Bankruptcy Court entered an order [Docket No. 8053] (the
"Confirmation Order") confirming the Plan, which incorporates the Bankruptcy
Court's prior order approving the Plan funding transactions and documents
[Docket No. 7909]. A copy of the Confirmation Order, with a copy of the Plan, as
confirmed, attached thereto, is filed as Exhibit 2.1 hereto and is incorporated
herein by reference. Any description or summary of the terms of the Plan herein
are qualified in their entirety by Exhibit 2.1 hereto.
The Effective Date is subject to the satisfaction of the following conditions
precedent, each of which is set forth in the Plan: (i) the Confirmation Order
shall be in full force and effect, and no stay thereof shall be in effect; (ii)
the Subrogation Claims RSA, the Tort Claimants RSA, and the Noteholder RSA shall
all be in full force and effect; (iii) the adversary proceeding commenced by the
Tort Claimants Committee against the Ad Hoc Group of Subrogation Claim Holders
(Complaint for Declaratory Judgment Subordinating and Disallowing Claims and For
an Accounting, Official Comm. of Tort Claimants v. Ad Hoc Grp. of Subrogation
Claim Holders, Adv. Pro. No. 19-3053 (N.D. Cal. Nov. 8, 2019), ECF. No. 1) shall
have been dismissed with prejudice; (iv) the Tax Benefits Payment Agreement
shall have been fully executed, shall be in full force and effect, and shall
have received any necessary approvals; (v) the Debtors shall have implemented
all transactions contemplated by the Plan; (vi) all documents and agreements
necessary to consummate the Plan shall have been effected or executed; (vii) the
Bankruptcy Court approval for the Debtors to participate in and fund the
Go-Forward Wildfire Fund shall be in full force and effect; (viii) the Debtors
shall have obtained the Plan Funding; (ix) the Debtors shall have received all
authorizations, consents, legal and regulatory approvals, rulings, letters,
no-action letters, opinions, or documents that are necessary to implement and
consummate the Plan and the Plan Funding and that are required by law,
regulation, or order; (x) the CPUC Approval shall be in full force and effect;
(xi) the Subrogation Wildfire Trust shall have been established and the
Subrogation Wildfire Trustee shall have been appointed; (xii) the Fire Victim
Trust shall have been established and the Fire Victim Trustee shall have been
appointed; and (xiii) the Plan shall not have been materially amended, altered
or modified from the Plan as confirmed by the Confirmation Order, unless such
material amendment, alteration or modification has been made in accordance with
Section 12.6 (Plan Modifications and Amendments) of the Plan.
Although the Debtors are targeting occurrence of the Effective Date as soon as
reasonably practicable, the Debtors can make no assurances as to when, or
ultimately if, the Plan will become effective.
Restructuring Transactions
The following is a summary of certain provisions of the Plan as it relates to
the Corporation and the Utility and is not intended to be a complete description
of the Plan.
--------------------------------------------------------------------------------
The Plan provides for certain transactions and the satisfaction and treatment of
certain claims against the Debtors, each in accordance with the terms of the
Plan, including the following transactions on or around the Effective Date:
? The Corporation and the Utility will fund a trust (the "Fire Victim Trust") for
the benefit of all holders of Fire Victim Claims, whose claims will be
channeled to the Fire Victim Trust on the Effective Date with no recourse to
the Debtors or the Reorganized Debtors. In full satisfaction, release, and
discharge of all Fire Victim Claims, the Fire Victim Trust will be funded with
$6.75 billion in cash (including $1.35 billion on a deferred basis), common
stock of the Reorganized Corporation representing 22.19% of the outstanding
common stock of the Reorganized Corporation as of the Effective Date (subject
to potential adjustments), plus the assignment of certain rights and causes of
action;
? The Corporation and the Utility will fund a trust (the "Subrogation Wildfire
Trust") for the benefit of insurance subrogation claimants, whose claims will
. . .
Item 3.03. Material Modification to the Rights of Security Holders.
The information set forth in Item 5.03 is incorporated into this Item 3.03 by
reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure and Appointment of Directors
In connection with the implementation of the Plan, as of the Effective Date, the
following directors will cease to serve on the board of directors of each of the
Debtors: Richard R. Barrera, Nora Mead Brownell, Fred J. Fowler, Michael J.
Leffell, Dominique Mielle, Meridee A. Moore, Eric D. Mullins, Kristine M.
Schmidt and Alejandro D. Wolff. As previously disclosed in Item 5.02 of the
Debtors' Form 8-K filed on April 22, 2020, as of June 30, 2020, William D.
Johnson will cease to serve on the board of directors of each of the Debtors.
In connection with the implementation of the Plan, as of the Effective Date, the
board of directors of the Corporation (the "Corporation Board") will consist of
fourteen directors, assuming the Extension Request, defined and described below,
is granted. In addition, as of the Effective Date, the board of directors of the
Utility (the "Utility Board" and, together with the Corporation Board, the
"Boards") will consist of twelve directors. Each of the Boards will retain
William L. Smith, Cheryl F. Campbell, and John M. Woolard. The Utility Board
will also retain Andrew M. Vesey. In connection with the implementation of the
Plan, the following new directors (the "new directors") will be added to the
Boards as of the Effective Date, except as indicated:
Rajat Bahri - Currently CFO of Wish, a mobile eCommerce platform (2016-present);
previously CFO of Jasper Technologies (2013-2016), CFO of Trimble Navigation
(2005-2013), and CFO of Kraft Canada (2001-2004). Beyond his financial
expertise, Rajat Bahri brings experience in executive compensation, enterprise
risk management, and corporate governance and the operation of audit committees.
Kerry W. Cooper - Most recently President and COO of Rothy's (2017-2020);
previously CEO of Choose Energy (2013-2016), COO and CMO of ModCloth
(2010-2013), VP, Global eCommerce of Walmart (2010), and CMO and VP, Marketing
and Strategy of Walmart (2008-2010). Kerry Cooper has extensive experience in
the consumer space.
Jessica L. Denecour* - Most recently Senior VP and CIO of Varian Medical
Systems; previously numerous roles at Agilent Technologies, including VP of
Global IT Applications and Solution Services (2005), VP of Global Infrastructure
and Operations Services (2000-2004), and Senior Director and CIO of Test and
Measurement Group (1999-2000), and 16 years at Hewlett Packard. Jessica Denecour
joins the Boards with experience in information technology and cybersecurity.
Mark E. Ferguson III - Currently Senior Advisor to private consultancies and the
Institute for Defense Analysis and NATO Allied Command Transformation;
previously 38-year career in the U.S. Navy, retiring in 2016 after having served
as Commander of the U.S. Naval Forces in Europe and Africa and NATO Allied Joint
Force Command (2014-2016) and Vice Chief of Naval Operations (2011-2014).
Through Mark Ferguson's leadership positions in the U.S. Navy, he brings the
Boards experience in nuclear reactor operations, risk and change management,
cyber preparedness, legislative initiatives, personnel operations, and the
management of transportation and equipment assets.
Robert C. Flexon* - Most recently CEO of Dynegy (2011-2018); previously CFO of
UGI (2001-2011). Robert Flexon's expertise is in finance and accounting in the
chemicals and oil and gas sectors. He brings experience in safety, workforce
organization, and turnarounds having led both Dynegy's 2011 bankruptcy and its
culture transformation and M&A growth post-emergence.
William Craig Fugate - Currently Chief Emergency Management Officer of One
Concern (2017-present); previously Administrator of the Federal Emergency
Management Agency (FEMA) (2009-2017), and Director of the Florida Division of
Emergency Management (2001-2009). William Craig Fugate joins the Boards with
experience at the local, state, and federal levels in disaster preparedness and
management. He has overseen preparation and response efforts for disasters such
as wildfires and hurricanes, health crises, and national security threats.
--------------------------------------------------------------------------------
*Jessica Denecour, Robert Flexon and Michael Niggli will be seated on the
Corporation Board on the Effective Date, assuming the CPUC grants the Extension
Request, but will not be seated on the Utility Board pending the Federal Energy
Regulatory Commission's consideration of the Waiver Application.
--------------------------------------------------------------------------------
Arno L. Harris - Currently Managing Partner of AHC (2015-present); previously
Executive Chair and CEO of Alta Motors (2017-2018), Founder, CEO and Board Chair
of Recurrent Energy (2006-2015), CEO and General Manager of EI Solutions
(2005-2006), and Founder and CEO of Prevalent Power, Inc. (2001-2004). Arno
Harris has dedicated his career to solving climate change through the
intersection of technology, business, and public policy. He has experience in
the clean energy and electric mobility sectors with a focus on innovation,
change, and advocacy.
Michael R. Niggli, Jr.* - Most recently 13 years at Sempra Energy, including
President and COO of San Diego Gas & Electric (2010-2013), COO of San Diego Gas
& Electric (2007-2010), COO of Southern California Gas (2006-2007), and
President of Sempra Generation (2000-2006); previously Chairman, CEO and
President of Sierra Pacific Resources/Nevada Power Company (1998-2000). Michael
Niggli brings long-time leadership experience in regulated utilities. He has
strong relationships across the industry with accomplishments in areas of
reliability, customer satisfaction, supplier diversity, and climate-oriented
management.
Dean L. Seavers - Most recently President and Executive Director of National
Grid (2015-2020); previously Founder, CEO and Board Member of Red Hawk Fire &
Security (2012-2018), President of Global Services of United Technologies Fire
and Security (2010-2011), and President and CEO of GE Security (2007-2010).
Following a long career in managing operations in commercial and residential
security companies, Dean Seavers led National Grid's business transformation,
which included a focus on safety culture and performance. He is experienced in
customer-centric initiatives and led the division of National Grid's utilities
into jurisdictions with jurisdictional presidents.
Oluwadara J. Treseder - Currently CMO of Carbon (2018-present); previously CMO
of GE Business Innovations and GE Ventures (2017-2018), and Global Head of
Demand Generation of Apple's FileMaker Division (2015-2017). Oluwadara Treseder
is experienced in leading marketing and communications in highly regulated
industries and driving customer engagement to increase growth. She brings
expertise and focus to digital transformations.
Benjamin F. Wilson - Currently Chairman of national law firm Beveridge & Diamond
PC (2017-present), where he has spent his career since 1986. Through his work
litigating and advising clients on environmental issues as well as his service
as Monitor for the Duke Energy coal ash spill remediation project and as Deputy
Monitor in the Volkswagen emissions proceedings, Benjamin Wilson brings
experience in workplace safety, relevant environmental and wildlife protection
legislation, and the need for communication, accountability, and transparency in
dealing with customers and regulators.
Jessica Denecour, Robert Flexon, and Michael Niggli serve on the boards of
directors of other entities that are utilities or that do business with the
Utility. In order to serve on the Utility Board, FERC must grant a waiver of
. . .
Item 5.03. Amendments to Articles of Incorporation or Bylaws? Change in Fiscal
Year.
In connection with and as authorized by the Confirmation Order, on June 22,
2020, the Debtors each filed Amended and Restated Articles of Incorporation (the
"Amended Articles") with the Secretary of State of California (the "Secretary of
State") and adopted Amended and Restated Bylaws (the "Amended Bylaws")
substantially in the form filed with the Bankruptcy Court on June 8, 2020 in the
Fifth Supplement to the Plan Supplement to the Plan [Docket No. 7841]. Pursuant
to section 1400 of the California Corporations Code, as a result of the approval
of the Amended Articles and Amended Bylaws by the Confirmation Order, the
authority to file the Amended Articles and adopt the Amended Bylaws and to
effect the amendments thereunder, and all actions taken pursuant thereto, are
authorized and taken with like effect as if authorized and taken by unanimous
action of the board of directors and the shareholders of each of the Debtors.
Amended Articles of the Corporation
The Amended Articles of the Corporation amend and restate the articles of
incorporation of the Corporation in their entirety. The amendments effected by
the Amended Articles of the Corporation include:
? increasing the authorized number of shares of common stock to 3,600,000,000 and
the authorized number of shares of preferred stock to 400,000,000;
? increasing the size of the Corporation Board to consist of nine to fifteen
directors until December 31, 2020 and twelve to fifteen directors thereafter;
? prohibiting the issuance of any non-voting equity securities to the extent
prohibited by section 1123(a)(6) of the Bankruptcy Code; and
? establishing the Ownership Restrictions, as defined and described below.
The Amended Articles of the Corporation impose certain restrictions on the
transferability and ownership of the Corporation's capital stock and other
interests designated as "stock" of the Corporation by the Corporation Board as
disclosed in an SEC filing by the Corporation (such stock and other interest,
the "Equity Securities," and such restrictions on transferability and ownership,
the "Ownership Restrictions") in order to reduce the possibility of an equity
ownership shift that could result in limitations on the Corporation's ability to
utilize net operating loss carryforwards and other tax attributes from prior
taxable years for federal income tax purposes. Any acquisition of the
Corporation's capital stock that results in a shareholder being in violation of
these restrictions may not be valid. The Amended Articles allow the Ownership
Restrictions to be waived by the Corporation Board on a case by case basis.
Subject to certain exceptions, the Ownership Restrictions restrict (i) any
person or entity (including certain groups of persons) from directly or
indirectly acquiring or accumulating 4.75% or more of the Corporation's
outstanding Equity Securities and (ii) the ability of any person or entity
(including certain groups of persons) already owning, directly or indirectly,
4.75% or more of the Corporation's Equity Securities from increasing their
proportionate interest in the Corporation's Equity Securities. Any transferee
receiving Equity Securities that would result in a violation of the Ownership
Restrictions will not be recognized as a shareholder of the Corporation or
entitled to any rights of shareholders, including, without limitation, the right
to vote and to receive dividends or distributions, whether liquidating or
otherwise, in each case, with respect to the Equity Securities causing the
violation.
The Ownership Restrictions will remain in effect until the earliest of (i) the
repeal, amendment or modification of section 382 (and any comparable successor
provision) of the Internal Revenue Code, in such a way as to render the
restrictions imposed by section 382 of the Internal Revenue Code no longer
applicable to the Corporation, (ii) the beginning of a taxable year in which the
Corporation Board determines that no tax benefits attributable to net operating
losses or other tax attributes are available, (iii) the date selected by the
Corporation Board if it determines that the limitation amount imposed by section
382 of the Internal Revenue Code as of such date in the event of an "ownership
change" of the Corporation (as defined in section 382 of the Internal Revenue
Code and Treasury Regulation sections 1.1502-91 et seq.) would not be materially
less than the net operating loss carryforwards or "net unrealized built-in loss"
(within the meaning of section 382 of the Internal Revenue Code and Treasury
Regulation sections 1.1502-91 et seq.) of the Corporation and (iv) the date
selected by the Corporation Board if it determines that it is in the best
interests of its shareholders for the Ownership Restrictions to be removed or
released.
--------------------------------------------------------------------------------
The foregoing description of the amendments effected by the Amended Articles of
the Corporation does not purport to be complete and is subject to, and qualified
in its entirety by, the full text of the Amended and Restated Articles of
Incorporation of the Corporation, which are attached hereto as Exhibit 3.1 and
are incorporated herein by reference.
Amended Articles of the Utility
The Amended Articles of the Utility amend and restate the articles of
incorporation of the Utility in their entirety. The amendments effected by the
Amended Articles of the Utility include:
? prohibiting the issuance of any non-voting equity securities to the extent
prohibited by section 1123(a)(6) of the Bankruptcy Code; and
? establishing ownership and transfer restrictions with respect to equity
securities of the Utility that are substantially similar in all respects to the
Ownership Restrictions described above (except that such restrictions pertain
to the securities of the Utility).
The foregoing description of the amendments effected by the Amended Articles of
the Utility does not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Amended and Restated Articles of
Incorporation of the Utility, which are attached hereto as Exhibit 3.2 and are
incorporated herein by reference.
Amended Bylaws of the Corporation
The Amended Bylaws of the Corporation amend and restate the bylaws of the
Corporation in their entirety. The amendments effected by the Amended Bylaws of
the Corporation include:
? designating that the first annual meeting of shareholders following the
Effective Date will be held at a date and time designated by the Corporation
Board, which date must fall within fifteen months of the Effective Date;
? amending certain procedural requirements for requesting a record date in
connection with requesting to call a special meeting of shareholders;
? establishing a classified Corporation Board as follows:
o one class is to serve an initial term expiring in 2021, with a subsequent term
expiring in 2023, after which the term for each director in this class will
revert to one-year terms; and
o a second class to serve an initial term expiring in 2022, with a subsequent
term expiring in 2024, after which there will no longer be a classified
Corporation Board and all directors will serve one-year terms; and
? designating that there will be an executive-level Chief Risk Officer and
executive-level Chief Safety Officer of the Corporation, who will each be
required to provide certain risk and safety reports to the CPUC periodically;
and
? providing expanded authority to the Safety and Nuclear Oversight Committee (the
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Number
Exhibit Confirmation Order, dated June 20, 2020
2.1
Exhibit Amended and Restated Articles of Incorporation of PG&E Corporation
3.1
Exhibit Amended and Restated Articles of Incorporation of Pacific Gas and
3.2 Electric Company
Exhibit Amended and Restated Bylaws of PG&E Corporation
3.3
Exhibit Amended and Restated Bylaws of Pacific Gas and Electric Company
3.4
Exhibit Consent of Arno L. Harris
99.1
Exhibit Consent of Benjamin F. Wilson
99.2
Exhibit Consent of Dean L. Seavers
99.3
Exhibit Consent of Jessica L. Denecour
99.4
Exhibit Consent of Kerry W. Cooper
99.5
Exhibit Consent of Mark E. Ferguson III
99.6
Exhibit Consent of Michael R. Niggli, Jr.
99.7
Exhibit Consent of Oluwadara J. Treseder
99.8
Exhibit Consent of Rajat Bahri
99.9
Exhibit Consent of Robert C. Flexon
99.10
Exhibit Consent of William Craig Fugate
99.11
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document.
Cautionary Statement Concerning Forward-Looking Statements
This current report on Form 8-K includes forward-looking statements that are not
historical facts, including statements about the beliefs, expectations,
estimates, future plans and strategies of the Corporation and the Utility,
including but not limited to the Plan, the Plan Funding Transactions, the timing
of the Effective Date and certain governance changes. These statements are based
on current expectations and assumptions, which management believes are
reasonable, and on information currently available to management, but are
necessarily subject to various risks and uncertainties. In addition to the risk
that these assumptions prove to be inaccurate, other factors that could cause
actual results to differ materially from those contemplated by the
forward-looking statements include factors disclosed in the Corporation's and
the Utility's annual report on Form 10-K for the year ended December 31, 2019,
as updated by their joint quarterly report on Form 10-Q for the quarter ended
March 31, 2020, and their subsequent reports filed with the SEC. Additional
factors include, but are not limited to, those associated with the Chapter 11
cases of the Corporation and the Utility that commenced on January 29, 2019. The
Corporation and the Utility undertake no obligation to publicly update or revise
any forward-looking statements, whether due to new information, future events or
otherwise, except to the extent required by law.
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses
PG&E CORPORATION 
