PG&E, Aiming to Exit Chapter 11, Will Sell Stake to Group

PG&E is moving closer to exiting bankruptcy by selling a stake in the utility to a group of investment firms.
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PG&E  (PCG) - Get Report, gearing up to emerge from bankruptcy proceedings, said it would sell shares of the utility operator at a discount to a group of high-powered investment firms.

Shares of the San Francisco electric and gas company at last check rose 2.6% to $12.85. The shares initially fell on the news of the deal before rebounding.

PG&E agreed to sell $3.25 billion of common stock at $10.50 a share to a group of large investment firms.

The stock sale deal with Zimmer Partners, Fidelity, Appaloosa and Third Point prices shares of PG&E at a more than 16% discount from their closing price on Friday of $12.52.

The stock is trading at about half its 52-week high above $25, touched last June.

The deal, set to go into effect the day PG&E officially emerges from bankruptcy, is part of the utility company's exit financing plan for emerging from Chapter 11.

PG&E in May said it reached a $13.5 billion settlement with thousands of homeowners in California following a lawsuit over a series of devastating wildfires triggered by the utility giant's equipment.

Faced with $30 billion in potential liability over the wildfires, including the 2018 Camp Fire that destroyed the town of Paradise and killed 85 people, PG&E sought protection from its creditors last year in federal bankruptcy court.

"Today's announcement is another positive step toward PG&E's emergence from Chapter 11" while also "ensuring wildfire victims are paid more quickly," said Jason Wells, executive vice president and chief financial officer of the power company, in a statement.