PG&E evaluating proposal from hedge funds Knighthead Capital, Abrams Capital
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
(Reuters) – Power producer PG&E Corp said on Friday it is evaluating a proposal from hedge funds Knighthead Capital Management and Abrams Capital Management to provide equity capital commitments supporting a plan to reorganize the company.
“The Company has received the financing proposal from Abrams and Knighthead and is evaluating it, including the backstop commitment letters and related materials, in consultation with the Company’s advisors. The Company will respond to the proposal in due course,” PG&E said in a statement.
Shareholders Knighthead Capital and Abrams in a letter to PG&E on Thursday proposed raising $15 billion in equity to fund a planned reorganization of the power producer, which is facing huge liabilities from California wildfires.
The proposed fundraising, a rights offering of new shares, is the latest effort to rescue PG&E, which sought Chapter 11 bankruptcy protection earlier this year after severe wildfires in 2017 and 2018 resulted in more than $30 billion in liabilities.
Knighthead and Abrams pledged to purchase a portion of the offered equity if shares are left unsold through a so-called backstop commitment.
Reporting by Kanishka Singh in Bengaluru; Editing by Leslie Adler