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PACIFIC GAS & ELECTRIC CO FILES (8-K) Disclosing Bankruptcy or Receivership, Material Modification to Rights of Security Holders, Change in Directors or Principal Officers, Amendments to Articles of Inc. or Bylaws; Change in Fiscal Year, Financial

Source: 
Edgar Glimpses

Item 1.03. Bankruptcy or Receivership.

As previously disclosed, on January 29, 2019, PG&E Corporation (the "Corporation") and its subsidiary, Pacific Gas and Electric Company (the "Utility," and together with the Corporation, the "Debtors") filed voluntary petitions for relief under chapter 11 of title 11 ("Chapter 11") of the United States Code in the U.S. Bankruptcy Court for the Northern District of California (the "Bankruptcy Court"). The Debtors' Chapter 11 cases are being jointly administered under the caption In re: PG&E Corporation and Pacific Gas and Electric Company, Case No. 19-30088 (DM) (the "Chapter 11 Cases").

Confirmation of the Plan On June 19, 2020, the Debtors, certain funds and accounts managed or advised by Abrams Capital Management, L.P., and certain funds and accounts managed or advised by Knighthead Capital Management, LLC filed the Debtors' and Shareholder Proponents' Joint Chapter 11 Plan of Reorganization Dated June 19, 2020 [Docket No. 8048] with the Bankruptcy Court (as may be amended, modified, or supplemented, together with all exhibits and schedules thereto, the "Plan"). All capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Plan. The Plan incorporates by reference certain documents filed with the Bankruptcy Court as part of the "Plan Supplement," as the same has been amended from time to time prior to confirmation of the Plan and may be further amended prior to the effective date of the Plan (the "Effective Date").

On June 20, 2020, the Bankruptcy Court entered an order [Docket No. 8053] (the "Confirmation Order") confirming the Plan, which incorporates the Bankruptcy Court's prior order approving the Plan funding transactions and documents [Docket No. 7909]. A copy of the Confirmation Order, with a copy of the Plan, as confirmed, attached thereto, is filed as Exhibit 2.1 hereto and is incorporated herein by reference. Any description or summary of the terms of the Plan herein are qualified in their entirety by Exhibit 2.1 hereto.

The Effective Date is subject to the satisfaction of the following conditions precedent, each of which is set forth in the Plan: (i) the Confirmation Order shall be in full force and effect, and no stay thereof shall be in effect; (ii) the Subrogation Claims RSA, the Tort Claimants RSA, and the Noteholder RSA shall all be in full force and effect; (iii) the adversary proceeding commenced by the Tort Claimants Committee against the Ad Hoc Group of Subrogation Claim Holders (Complaint for Declaratory Judgment Subordinating and Disallowing Claims and For an Accounting, Official Comm. of Tort Claimants v. Ad Hoc Grp. of Subrogation Claim Holders, Adv. Pro. No. 19-3053 (N.D. Cal. Nov. 8, 2019), ECF. No. 1) shall have been dismissed with prejudice; (iv) the Tax Benefits Payment Agreement shall have been fully executed, shall be in full force and effect, and shall have received any necessary approvals; (v) the Debtors shall have implemented all transactions contemplated by the Plan; (vi) all documents and agreements necessary to consummate the Plan shall have been effected or executed; (vii) the Bankruptcy Court approval for the Debtors to participate in and fund the Go-Forward Wildfire Fund shall be in full force and effect; (viii) the Debtors shall have obtained the Plan Funding; (ix) the Debtors shall have received all authorizations, consents, legal and regulatory approvals, rulings, letters, no-action letters, opinions, or documents that are necessary to implement and consummate the Plan and the Plan Funding and that are required by law, regulation, or order; (x) the CPUC Approval shall be in full force and effect; (xi) the Subrogation Wildfire Trust shall have been established and the Subrogation Wildfire Trustee shall have been appointed; (xii) the Fire Victim Trust shall have been established and the Fire Victim Trustee shall have been appointed; and (xiii) the Plan shall not have been materially amended, altered or modified from the Plan as confirmed by the Confirmation Order, unless such material amendment, alteration or modification has been made in accordance with Section 12.6 (Plan Modifications and Amendments) of the Plan.

Although the Debtors are targeting occurrence of the Effective Date as soon as reasonably practicable, the Debtors can make no assurances as to when, or ultimately if, the Plan will become effective.

Restructuring Transactions The following is a summary of certain provisions of the Plan as it relates to the Corporation and the Utility and is not intended to be a complete description of the Plan.

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The Plan provides for certain transactions and the satisfaction and treatment of certain claims against the Debtors, each in accordance with the terms of the Plan, including the following transactions on or around the Effective Date:

? The Corporation and the Utility will fund a trust (the "Fire Victim Trust") for

the benefit of all holders of Fire Victim Claims, whose claims will be

channeled to the Fire Victim Trust on the Effective Date with no recourse to

the Debtors or the Reorganized Debtors. In full satisfaction, release, and

discharge of all Fire Victim Claims, the Fire Victim Trust will be funded with

$6.75 billion in cash (including $1.35 billion on a deferred basis), common

stock of the Reorganized Corporation representing 22.19% of the outstanding

common stock of the Reorganized Corporation as of the Effective Date (subject

to potential adjustments), plus the assignment of certain rights and causes of

action;

? The Corporation and the Utility will fund a trust (the "Subrogation Wildfire

Trust") for the benefit of insurance subrogation claimants, whose claims will . . .

Item 3.03. Material Modification to the Rights of Security Holders.

The information set forth in Item 5.03 is incorporated into this Item 3.03 by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Departure and Appointment of Directors In connection with the implementation of the Plan, as of the Effective Date, the following directors will cease to serve on the board of directors of each of the Debtors: Richard R. Barrera, Nora Mead Brownell, Fred J. Fowler, Michael J. Leffell, Dominique Mielle, Meridee A. Moore, Eric D. Mullins, Kristine M. Schmidt and Alejandro D. Wolff. As previously disclosed in Item 5.02 of the Debtors' Form 8-K filed on April 22, 2020, as of June 30, 2020, William D. Johnson will cease to serve on the board of directors of each of the Debtors.

In connection with the implementation of the Plan, as of the Effective Date, the board of directors of the Corporation (the "Corporation Board") will consist of fourteen directors, assuming the Extension Request, defined and described below, is granted. In addition, as of the Effective Date, the board of directors of the Utility (the "Utility Board" and, together with the Corporation Board, the "Boards") will consist of twelve directors. Each of the Boards will retain William L. Smith, Cheryl F. Campbell, and John M. Woolard. The Utility Board will also retain Andrew M. Vesey. In connection with the implementation of the Plan, the following new directors (the "new directors") will be added to the Boards as of the Effective Date, except as indicated:

Rajat Bahri - Currently CFO of Wish, a mobile eCommerce platform (2016-present); previously CFO of Jasper Technologies (2013-2016), CFO of Trimble Navigation (2005-2013), and CFO of Kraft Canada (2001-2004). Beyond his financial expertise, Rajat Bahri brings experience in executive compensation, enterprise risk management, and corporate governance and the operation of audit committees.

Kerry W. Cooper - Most recently President and COO of Rothy's (2017-2020); previously CEO of Choose Energy (2013-2016), COO and CMO of ModCloth (2010-2013), VP, Global eCommerce of Walmart (2010), and CMO and VP, Marketing and Strategy of Walmart (2008-2010). Kerry Cooper has extensive experience in the consumer space.

Jessica L. Denecour* - Most recently Senior VP and CIO of Varian Medical Systems; previously numerous roles at Agilent Technologies, including VP of Global IT Applications and Solution Services (2005), VP of Global Infrastructure and Operations Services (2000-2004), and Senior Director and CIO of Test and Measurement Group (1999-2000), and 16 years at Hewlett Packard. Jessica Denecour joins the Boards with experience in information technology and cybersecurity.

Mark E. Ferguson III - Currently Senior Advisor to private consultancies and the Institute for Defense Analysis and NATO Allied Command Transformation; previously 38-year career in the U.S. Navy, retiring in 2016 after having served as Commander of the U.S. Naval Forces in Europe and Africa and NATO Allied Joint Force Command (2014-2016) and Vice Chief of Naval Operations (2011-2014). Through Mark Ferguson's leadership positions in the U.S. Navy, he brings the Boards experience in nuclear reactor operations, risk and change management, cyber preparedness, legislative initiatives, personnel operations, and the management of transportation and equipment assets.

Robert C. Flexon* - Most recently CEO of Dynegy (2011-2018); previously CFO of UGI (2001-2011). Robert Flexon's expertise is in finance and accounting in the chemicals and oil and gas sectors. He brings experience in safety, workforce organization, and turnarounds having led both Dynegy's 2011 bankruptcy and its culture transformation and M&A growth post-emergence.

William Craig Fugate - Currently Chief Emergency Management Officer of One Concern (2017-present); previously Administrator of the Federal Emergency Management Agency (FEMA) (2009-2017), and Director of the Florida Division of Emergency Management (2001-2009). William Craig Fugate joins the Boards with experience at the local, state, and federal levels in disaster preparedness and management. He has overseen preparation and response efforts for disasters such as wildfires and hurricanes, health crises, and national security threats.

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*Jessica Denecour, Robert Flexon and Michael Niggli will be seated on the Corporation Board on the Effective Date, assuming the CPUC grants the Extension Request, but will not be seated on the Utility Board pending the Federal Energy Regulatory Commission's consideration of the Waiver Application.

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Arno L. Harris - Currently Managing Partner of AHC (2015-present); previously Executive Chair and CEO of Alta Motors (2017-2018), Founder, CEO and Board Chair of Recurrent Energy (2006-2015), CEO and General Manager of EI Solutions (2005-2006), and Founder and CEO of Prevalent Power, Inc. (2001-2004). Arno Harris has dedicated his career to solving climate change through the intersection of technology, business, and public policy. He has experience in the clean energy and electric mobility sectors with a focus on innovation, change, and advocacy.

Michael R. Niggli, Jr.* - Most recently 13 years at Sempra Energy, including President and COO of San Diego Gas & Electric (2010-2013), COO of San Diego Gas & Electric (2007-2010), COO of Southern California Gas (2006-2007), and President of Sempra Generation (2000-2006); previously Chairman, CEO and President of Sierra Pacific Resources/Nevada Power Company (1998-2000). Michael Niggli brings long-time leadership experience in regulated utilities. He has strong relationships across the industry with accomplishments in areas of reliability, customer satisfaction, supplier diversity, and climate-oriented management.

Dean L. Seavers - Most recently President and Executive Director of National Grid (2015-2020); previously Founder, CEO and Board Member of Red Hawk Fire & Security (2012-2018), President of Global Services of United Technologies Fire and Security (2010-2011), and President and CEO of GE Security (2007-2010). Following a long career in managing operations in commercial and residential security companies, Dean Seavers led National Grid's business transformation, which included a focus on safety culture and performance. He is experienced in customer-centric initiatives and led the division of National Grid's utilities into jurisdictions with jurisdictional presidents.

Oluwadara J. Treseder - Currently CMO of Carbon (2018-present); previously CMO of GE Business Innovations and GE Ventures (2017-2018), and Global Head of Demand Generation of Apple's FileMaker Division (2015-2017). Oluwadara Treseder is experienced in leading marketing and communications in highly regulated industries and driving customer engagement to increase growth. She brings expertise and focus to digital transformations.

Benjamin F. Wilson - Currently Chairman of national law firm Beveridge & Diamond PC (2017-present), where he has spent his career since 1986. Through his work litigating and advising clients on environmental issues as well as his service as Monitor for the Duke Energy coal ash spill remediation project and as Deputy Monitor in the Volkswagen emissions proceedings, Benjamin Wilson brings experience in workplace safety, relevant environmental and wildlife protection legislation, and the need for communication, accountability, and transparency in dealing with customers and regulators.

Jessica Denecour, Robert Flexon, and Michael Niggli serve on the boards of directors of other entities that are utilities or that do business with the Utility. In order to serve on the Utility Board, FERC must grant a waiver of . . .

Item 5.03. Amendments to Articles of Incorporation or Bylaws? Change in Fiscal Year.

In connection with and as authorized by the Confirmation Order, on June 22, 2020, the Debtors each filed Amended and Restated Articles of Incorporation (the "Amended Articles") with the Secretary of State of California (the "Secretary of State") and adopted Amended and Restated Bylaws (the "Amended Bylaws") substantially in the form filed with the Bankruptcy Court on June 8, 2020 in the Fifth Supplement to the Plan Supplement to the Plan [Docket No. 7841]. Pursuant to section 1400 of the California Corporations Code, as a result of the approval of the Amended Articles and Amended Bylaws by the Confirmation Order, the authority to file the Amended Articles and adopt the Amended Bylaws and to effect the amendments thereunder, and all actions taken pursuant thereto, are authorized and taken with like effect as if authorized and taken by unanimous action of the board of directors and the shareholders of each of the Debtors.

Amended Articles of the Corporation

The Amended Articles of the Corporation amend and restate the articles of incorporation of the Corporation in their entirety. The amendments effected by the Amended Articles of the Corporation include:

? increasing the authorized number of shares of common stock to 3,600,000,000 and

the authorized number of shares of preferred stock to 400,000,000;

? increasing the size of the Corporation Board to consist of nine to fifteen

directors until December 31, 2020 and twelve to fifteen directors thereafter;

? prohibiting the issuance of any non-voting equity securities to the extent

prohibited by section 1123(a)(6) of the Bankruptcy Code; and

? establishing the Ownership Restrictions, as defined and described below.

The Amended Articles of the Corporation impose certain restrictions on the transferability and ownership of the Corporation's capital stock and other interests designated as "stock" of the Corporation by the Corporation Board as disclosed in an SEC filing by the Corporation (such stock and other interest, the "Equity Securities," and such restrictions on transferability and ownership, the "Ownership Restrictions") in order to reduce the possibility of an equity ownership shift that could result in limitations on the Corporation's ability to utilize net operating loss carryforwards and other tax attributes from prior taxable years for federal income tax purposes. Any acquisition of the Corporation's capital stock that results in a shareholder being in violation of these restrictions may not be valid. The Amended Articles allow the Ownership Restrictions to be waived by the Corporation Board on a case by case basis.

Subject to certain exceptions, the Ownership Restrictions restrict (i) any person or entity (including certain groups of persons) from directly or indirectly acquiring or accumulating 4.75% or more of the Corporation's outstanding Equity Securities and (ii) the ability of any person or entity (including certain groups of persons) already owning, directly or indirectly, 4.75% or more of the Corporation's Equity Securities from increasing their proportionate interest in the Corporation's Equity Securities. Any transferee receiving Equity Securities that would result in a violation of the Ownership Restrictions will not be recognized as a shareholder of the Corporation or entitled to any rights of shareholders, including, without limitation, the right to vote and to receive dividends or distributions, whether liquidating or otherwise, in each case, with respect to the Equity Securities causing the violation.

The Ownership Restrictions will remain in effect until the earliest of (i) the repeal, amendment or modification of section 382 (and any comparable successor provision) of the Internal Revenue Code, in such a way as to render the restrictions imposed by section 382 of the Internal Revenue Code no longer applicable to the Corporation, (ii) the beginning of a taxable year in which the Corporation Board determines that no tax benefits attributable to net operating losses or other tax attributes are available, (iii) the date selected by the Corporation Board if it determines that the limitation amount imposed by section 382 of the Internal Revenue Code as of such date in the event of an "ownership change" of the Corporation (as defined in section 382 of the Internal Revenue Code and Treasury Regulation sections 1.1502-91 et seq.) would not be materially less than the net operating loss carryforwards or "net unrealized built-in loss" (within the meaning of section 382 of the Internal Revenue Code and Treasury Regulation sections 1.1502-91 et seq.) of the Corporation and (iv) the date selected by the Corporation Board if it determines that it is in the best interests of its shareholders for the Ownership Restrictions to be removed or released.

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The foregoing description of the amendments effected by the Amended Articles of the Corporation does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Amended and Restated Articles of Incorporation of the Corporation, which are attached hereto as Exhibit 3.1 and are incorporated herein by reference.

Amended Articles of the Utility

The Amended Articles of the Utility amend and restate the articles of incorporation of the Utility in their entirety. The amendments effected by the Amended Articles of the Utility include:

? prohibiting the issuance of any non-voting equity securities to the extent

prohibited by section 1123(a)(6) of the Bankruptcy Code; and

? establishing ownership and transfer restrictions with respect to equity

securities of the Utility that are substantially similar in all respects to the

Ownership Restrictions described above (except that such restrictions pertain

to the securities of the Utility).

The foregoing description of the amendments effected by the Amended Articles of the Utility does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Amended and Restated Articles of Incorporation of the Utility, which are attached hereto as Exhibit 3.2 and are incorporated herein by reference.

Amended Bylaws of the Corporation

The Amended Bylaws of the Corporation amend and restate the bylaws of the Corporation in their entirety. The amendments effected by the Amended Bylaws of the Corporation include:

? designating that the first annual meeting of shareholders following the

Effective Date will be held at a date and time designated by the Corporation

Board, which date must fall within fifteen months of the Effective Date;

? amending certain procedural requirements for requesting a record date in

connection with requesting to call a special meeting of shareholders;

? establishing a classified Corporation Board as follows:

o one class is to serve an initial term expiring in 2021, with a subsequent term

expiring in 2023, after which the term for each director in this class will

revert to one-year terms; and

o a second class to serve an initial term expiring in 2022, with a subsequent

term expiring in 2024, after which there will no longer be a classified

Corporation Board and all directors will serve one-year terms; and

? designating that there will be an executive-level Chief Risk Officer and

executive-level Chief Safety Officer of the Corporation, who will each be

required to provide certain risk and safety reports to the CPUC periodically;

and

? providing expanded authority to the Safety and Nuclear Oversight Committee (the . . .

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit Description Number Exhibit Confirmation Order, dated June 20, 2020 2.1 Exhibit Amended and Restated Articles of Incorporation of PG&E Corporation 3.1

Exhibit Amended and Restated Articles of Incorporation of Pacific Gas and 3.2 Electric Company

Exhibit Amended and Restated Bylaws of PG&E Corporation 3.3 Exhibit Amended and Restated Bylaws of Pacific Gas and Electric Company 3.4 Exhibit Consent of Arno L. Harris 99.1 Exhibit Consent of Benjamin F. Wilson 99.2 Exhibit Consent of Dean L. Seavers 99.3 Exhibit Consent of Jessica L. Denecour 99.4 Exhibit Consent of Kerry W. Cooper 99.5 Exhibit Consent of Mark E. Ferguson III 99.6 Exhibit Consent of Michael R. Niggli, Jr. 99.7 Exhibit Consent of Oluwadara J. Treseder 99.8 Exhibit Consent of Rajat Bahri 99.9 Exhibit Consent of Robert C. Flexon 99.10 Exhibit Consent of William Craig Fugate 99.11

104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

Cautionary Statement Concerning Forward-Looking Statements

This current report on Form 8-K includes forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of the Corporation and the Utility, including but not limited to the Plan, the Plan Funding Transactions, the timing of the Effective Date and certain governance changes. These statements are based on current expectations and assumptions, which management believes are reasonable, and on information currently available to management, but are necessarily subject to various risks and uncertainties. In addition to the risk that these assumptions prove to be inaccurate, other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include factors disclosed in the Corporation's and the Utility's annual report on Form 10-K for the year ended December 31, 2019, as updated by their joint quarterly report on Form 10-Q for the quarter ended March 31, 2020, and their subsequent reports filed with the SEC. Additional factors include, but are not limited to, those associated with the Chapter 11 cases of the Corporation and the Utility that commenced on January 29, 2019. The Corporation and the Utility undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise, except to the extent required by law.

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