(Reuters) – California utility owner PG&E Corp is preparing to name a restructuring chief as it finalizes preparations for a bankruptcy filing expected to come as soon as early Tuesday morning, people familiar with the matter said.
FILE PHOTO: PG&E works on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo
PG&E plans to file for bankruptcy protection in a San Francisco federal court, the sources said, in part to address liabilities it expects to top $30 billion stemming from catastrophic wildfires in the last two years that have killed more than 100 people and destroyed numerous homes.
The San Francisco-based utility owner, which carries debt exceeding $18 billion, is in the final stages of discussions to appoint longtime turnaround specialist James Mesterharm as its chief restructuring officer to help the company navigate bankruptcy proceedings, the sources said.
The company is pressing on with its bankruptcy plan, which it announced earlier this month, even as some of its creditors proposed last-ditch rescue-financing packages to prevent such a move, some of the sources said.
The sources asked not to be identified discussing internal company developments and cautioned that Mesterharm’s appointment was still in the process of being finalized Monday evening. A PG&E spokeswoman didn’t immediately respond to a request for comment.
On Monday, the California Public Utilities Commission approved PG&E’s plans to tap up to $6 billion in so-called debtor-in-possession financing to help it operate while under bankruptcy protection.
VETERAN FROM KODAK, ZENITH
Mesterharm, a managing director at turnaround and consulting firm AlixPartners LLP, previously served as restructuring chief at Eastman Kodak Co during its bankruptcy proceedings. Other companies he has advised on restructurings include mall owner General Growth Properties and Zenith Electronics. He has advised PG&E in the weeks leading up to its anticipated bankruptcy filing, the sources said.
An AlixPartners spokesman had no immediate comment.
PG&E debtholders in recent days delivered separate multibillion-dollar rescue proposals to the company, people familiar with the offers said. The proposals, also shared with California Gov. Gavin Newsom, each offered financing in exchange for debt that can later be converted into shares when PG&E’s stock trades at a certain price, the sources said.
A Newsom spokesman didn’t immediately respond to a request for comment.
A group comprising investment firms Apollo Global Management LLC, Citadel, Davidson Kempner Capital Management and Centerbridge Partners LP proposed between $3 billion and $5 billion of financing, the sources said. Another team of Elliott Management Corp and Pacific Investment Management Co offered $4 billion, they said.
The debtholders either declined to comment, had no immediate comment or didn’t respond to requests for comment.
The financing proposals came on the heels of state investigators clearing PG&E of liability in a 2017 fire that tore through wine country and killed 22 people.
PG&E still faces scrutiny over its equipment’s role in a November blaze that ignited in the northern California mountain community of Paradise, killing at least 86 people in the most catastrophic wildfire in state history.
PG&E has pointed to extensive litigation and a deteriorating financial situation leading up to its expected bankruptcy filing. In a securities filing earlier this month, PG&E said obtaining additional financing to avoid a bankruptcy filing, though possible, would be expensive, complicated and fail to address the company’s fundamental problems.
At least one shareholder, BlueMountain Capital Management LLC, has criticized the plan as harmful to investors and has launched an effort to oust PG&E’s entire board.
Reporting by Mike Spector in New York; Additional reporting by Jim Christie in San Francisco, Sharon Bernstein in Sacramento and Svea Herbst in New York; Editing by Sonya Hepinstall