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