PG&E wins approval to repay some creditors

The Associated Press
Saturday March 30, 2002

SAN FRANCISCO — PG&E Corp. won approval to repay $790 million to a group of Pacific Gas and Electric creditors, overcoming objections that the deal is designed to sway an upcoming vote on how the utility will emerge from bankruptcy. 

In a Wednesday ruling, U.S. Bankruptcy Judge Dennis Montali approved payments to 18 fund managers after PG&E dropped a condition that would have required the creditors to vote in favor of the San Francisco-based company’s reorganization plan. 

PG&E is trying to convince creditors that its plan is preferable to an alternative drawn up by the state Public Utilities Commission. 

U.S. Bankruptcy Trustee Linda Stanley said the repayments could still influence the vote because the affected creditors might fear they won’t get the money already promised them if the PUC plan prevails. Stanley tried to convince Montali that PG&E repayments are highly unusual and unwarranted. 

Montali initially rejected the repayment plan, but reversed course after PG&E agreed to allow creditors to vote for the PUC plan. 

In another development, Pacific Gas and Electric said it won’t interfere with the California’s plans to issue $12.5 billion in bonds to recover government money spent buying electricity on behalf of PG&E and other troubled utilities. 

It had been feared PG&E would file a lawsuit seeking to block the state from charging the utility’s customers for the power, a move that would have further delayed California’s planned bond sale. Gordon Smith, Pacific Gas and Electric’s president, said the utility won’t sue, despite its misgivings, in a letter to state Treasurer Phil Angelides. 

California is trying to recoup an electricity bill of more than $6 billion. Although he hailed PG&E’s commitment as a significant development, Angelides said it’s unlikely California will sell the bonds before July 1, the start of the state’s fiscal year. 


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