PRESS RELEASES 2002 RELEASE
FOR IMMEDIATE RELEASE
July 11, 2002
Contact: News Department (415) 973-5930
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.

CHAPTER 11 UPDATE: PG&E FILES OPPOSITION TO CPUC'S REQUEST TO HAVE UTILITY PAY FOR UBS WARBURG'S FEES

SAN FRANCISCO - PG&E Corporation (NYSE: PCG) and Pacific Gas and Electric Company today filed their strong opposition to the California Public Utilities Commission (CPUC) request that the utility be required to pay for UBS Warburg's fees and expenses in connection with the Commission's alternative plan of reorganization.

In the filing, the companies said that the Bankruptcy Court should deny the Commission's request, since there is no authority in the Bankruptcy Code or related law that allows a debtor to pay for a creditor to hire an investment banker.

Moreover, the UBS Warburg agreement itself cannot be justified because its fees, which could exceed more than $125 million, are far beyond customary commercial terms:

  • There is nothing in UBS Warburg's agreement that commits the firm to provide any services that are beneficial to PG&E's bankruptcy estate.

  • The magnitude of UBS Warburg's compensation structure is completely unwarranted. It exceeds Wall Street standards for investment banking fees.

  • The agreement includes a completely inappropriate $8 million upfront retainer fee. Worse yet, there are no standards that UBS Warburg provides valuable services for the $8 million fee.

On June 25, the CPUC announced that it had hired UBS Warburg in an effort to show that its alternative plan was financially feasible. After reviewing the agreement, it is clear that UBS Warburg has not committed its assets, produced a "highly confident" letter, or provided other support necessary for financing the CPUC alternative plan.

The Bankruptcy Court is scheduled to hear the oral arguments on July 22, 2002.


 

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