EDITORS: Please do not use
"Pacific Gas and Electric" or "PG&E" when
referring to PG&E Corporation or its National Energy Group.
The PG&E National Energy Group is not the same company as Pacific
Gas and Electric Company, the utility, and is not regulated by the
California Public Utilities Commission. Customers of Pacific Gas
and Electric Company do not have to buy products or services from
the National Energy Group in order to continue to receive quality
regulated services from Pacific Gas and Electric Company.
RESTRUCTURES HOLDING COMPANY DEBT TO PAY DEFAULTS
(San Francisco, CA) - PG&E
Corporation (NYSE: PCG) today closed a $1 billion loan agreement
with GE Capital Structured Finance Group, as Lender and Co-Arranger,
and Lehman Brothers as Lender, Administrative Agent, Lead Arranger,
and Book Manager, to restructure the Corporation's debt and pay
obligations on which it has defaulted.
The loans, secured by the
Corporation's equity interest in its PG&E National Energy Group,
LLC, have enabled the Corporation to pay its outstanding debt obligations
on which the Corporation has defaulted or would default in the near
future. The obligations that have been paid include: $501 million
in payments to commercial paper holders, $434 million in borrowings
under a revolving credit agreement, and $116 million owed to PG&E
Corporation common shareholders for the defaulted fourth-quarter
The agreement also provides
the lenders with options that, depending on certain factors, would
allow them to acquire between 2 percent and 3 percent of the shares
of PG&E National Energy Group, Inc. The term of the loan agreement
is two years with an option by PG&E Corporation to extend it for
an additional year.
"The defaults created the
risk that the Corporation might face a bankruptcy in the near future,"
said Chairman, CEO and President Robert D. Glynn, Jr., "and bankruptcy
of the Corporation would benefit no one."
Glynn emphasized that the
financing would be repaid with PG&E Corporation shareholder dollars
only. "Unlike the Utility's costs of procuring wholesale electricity
for utility customers, this financing is a general corporate obligation
of PG&E Corporation, and it will be repaid entirely with shareholder
dollars," he said. "It has no impact on the rates the Utility's
customers pay now or in the future."
As required by the loan
agreement, the funds were used to repay substantially all outstanding
debt, and the Corporation's fourth-quarter 2000 common stock dividend,
on which the Corporation defaulted in January when it was due to
be paid. The Corporation's Board of Directors declared the dividend
in October of 2000. The payment became an outstanding obligation
after the record date on December 15, 2000, and the failure to pay
it represented a default, which the lenders required the Corporation
to pay with the proceeds of the loan, as part of the agreement.
The loan agreement prohibits
the Corporation from declaring or paying future common stock dividends
until the loans are repaid. Dividend payments will be resumed when
the Board of Directors determines that it is in the best interest
of the Corporation to do so.
PG&E Corporation markets
energy services and products throughout North America through its
National Energy Group. PG&E Corporation's businesses also include
Pacific Gas and Electric Company, the Northern and Central California
utility that deliver natural gas and electricity to one in every