OAKLAND,
Calif., Nov. 29, 2023 /PRNewswire/ -- PG&E
Corporation (NYSE: PCG) announced the pricing of its offering of
$1.9 billion aggregate principal
amount of 4.25% Convertible Senior Secured Notes due 2027 (the
"Convertible Notes") in a private placement under the Securities
Act of 1933, as amended (the "Securities Act"), reflecting an
upsize of $400 million over the
previously announced offering size. PG&E Corporation also
granted to the initial purchasers of the Convertible Notes an
option to purchase, for settlement within a 13-day period from, and
including, the date on which the Convertible Notes are first
issued, up to an additional $250
million aggregate principal amount of the Convertible Notes.
The sale of the Convertible Notes is expected to close on
December 4, 2023, subject to
customary closing conditions.
PG&E Corporation expects that the net proceeds from the
Convertible Notes will be approximately $1.876 billion (or approximately $2.123 billion if the initial purchasers exercise
their option to purchase additional Convertible Notes in full),
after deducting initial purchasers' discounts and commissions and
offering expenses payable by PG&E Corporation. PG&E
Corporation intends to use the net proceeds from the offering of
the Convertible Notes plus cash on hand to prepay $1.9 billion of the loans outstanding under its
$2.75 billion secured term loan
credit agreement entered into in June
2020 (the "term loan credit agreement"). If the
initial purchasers exercise their option to purchase additional
Convertible Notes, PG&E Corporation expects to use the net
proceeds from the sale of the additional Convertible Notes plus
cash on hand to prepay up to $250
million of the loans outstanding under the term loan credit
agreement. On November 24,
2023, borrowings under the term loan credit agreement
totaled approximately $2.66
billion. Such borrowings bear interest based at a
floating rate (approximately 8.44% per annum on November 24, 2023). The term loan credit
agreement matures on June 23, 2025,
unless extended by PG&E Corporation pursuant to its terms.
The Convertible Notes will be general senior secured obligations
of PG&E Corporation and will be secured on a first lien basis
by the pledge of PG&E Corporation's ownership interest in 100%
of the shares of common stock of its principal subsidiary, Pacific
Gas and Electric Company (the "Utility"), and any other shares of
common stock of the Utility obtained by PG&E Corporation in the
future and the certificates or instruments representing such shares
of common stock (collectively, "Collateral"), subject to certain
permitted liens.
The Convertible Notes will not initially be guaranteed by the
Utility or any of PG&E Corporation's other subsidiaries.
The Convertible Notes will rank equal in right of payment
with all of PG&E Corporation's existing and future senior
obligations; will rank effectively junior to all of PG&E
Corporation's existing and future senior secured obligations that
are secured by assets other than the Collateral to the extent of
the value of such assets securing such obligations; will rank
effectively junior to all existing and future senior secured
obligations under PG&E Corporation's revolving credit facility
to the extent of the value of the Collateral (up to an amount not
to exceed $650 million), and equal
with all of PG&E Corporation's other existing and future senior
secured obligations to the extent secured by the Collateral; will
rank effectively senior to any of PG&E Corporation's existing
and future unsecured obligations to the extent of the value of the
Collateral; will rank senior in right of payment to all of PG&E
Corporation's future subordinated indebtedness; and will be
structurally subordinated to all indebtedness and other obligations
(including trade payables, other secured and unsecured indebtedness
and preferred stock obligations) of the Utility and all of PG&E
Corporation's other subsidiaries (other than any subsidiaries that
may become guarantors in the future).
The Convertible Notes will mature on December 1, 2027, unless earlier converted or
repurchased. The Convertible Notes will bear interest at a rate of
4.25% per year, payable semiannually in arrears on June 1 and December
1 of each year, beginning on June 1,
2024. Prior to the close of business on the business day
immediately preceding September 1,
2027, the Convertible Notes will be convertible only upon
the occurrence of certain events and during certain periods. On or
after September 1, 2027, the
Convertible Notes will be convertible by holders at any time in
whole or in part until the close of business on the business day
immediately preceding the maturity date. PG&E Corporation will
settle conversions of the Convertible Notes by paying or
delivering, as the case may be, cash, shares of PG&E
Corporation's common stock, no par value ("Common Stock"), or a
combination of cash and shares of Common Stock ("Combination
Settlement"), at its election. PG&E Corporation's current
intent and policy is to settle conversions through Combination
Settlement with a specified dollar amount (payable in cash) per
$1,000 principal amount of
Convertible Notes of $1,000.
The conversion rate for the Convertible Notes will initially be
43.1416 shares of Common Stock per $1,000 principal amount of the Convertible Notes
(equivalent to an initial conversion price of approximately
$23.18 per share of Common Stock).
The initial conversion price of the Convertible Notes represents a
premium of approximately 35.0% over the last reported sale price of
PG&E Corporation's common stock on The New York Stock Exchange
on November 29, 2023. The conversion
rate and the corresponding conversion price will be subject to
adjustment in connection with some events but will not be adjusted
for any accrued and unpaid interest. PG&E Corporation may not
redeem the Convertible Notes prior to the maturity date.
If PG&E Corporation undergoes a fundamental change (other
than an exempted fundamental change, each as defined in the
indenture that will govern the Convertible Notes), subject to
certain conditions, holders of the Convertible Notes may require
PG&E Corporation to repurchase for cash all or any portion of
their Convertible Notes at a repurchase price equal to 100% of the
principal amount of Convertible Notes to be repurchased, plus
accrued and unpaid interest to, but excluding, the fundamental
change repurchase date (as defined in the indenture that will
govern the Convertible Notes). In addition, if certain corporate
events occur, PG&E Corporation may be required, in certain
circumstances, to increase the conversion rate for any Convertible
Notes converted in connection with such corporate events by a
specified number of shares of its Common Stock.
The offering is being made only to persons reasonably believed
to be qualified institutional buyers pursuant to Rule 144A under
the Securities Act. Any offers of the Convertible Notes will be
made only by means of a private offering memorandum. None of the
Convertible Notes or any shares of the Common Stock issuable upon
conversion of the Convertible Notes have been or are expected to be
registered under the Securities Act or any state securities laws
and, unless so registered, may not be offered or sold in
the United States or to U.S.
persons except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and applicable state securities laws.
This news release is for informational purposes only and does
not constitute an offer to sell or purchase, or the solicitation of
an offer to sell or purchase these securities, nor will there be
any sale of these securities in any state or other jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or other jurisdiction.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company
headquartered in Oakland,
California. It is the parent company of the Utility, an
energy company that serves 16 million Californians across a
70,000-square-mile service area in Northern and Central California.
Forward-Looking Statements
This news release contains forward-looking statements that are
not historical facts, including statements about the closing of the
offering of the Convertible Notes and the expected use of proceeds
from the offering. 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,
factors that could cause actual results to differ materially from
those contemplated by the forward-looking statements include
factors disclosed in PG&E Corporation's annual report on Form
10-K for the year ended December 31,
2022, its most recent quarterly report on Form 10-Q for the
quarter ended September 30, 2023, and
other reports filed with the SEC, which are available on the SEC's
website. PG&E Corporation undertakes 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.
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SOURCE PG&E Corporation