PG&E makes landmark deal

Pacific Gas and Electric Corp. made a landmark agreement with its bondholders Wednesday that wards off a hostile takeover attempt, but the utility encountered fresh headwinds from Gov. Gavin Newsom over its plans to exit bankruptcy.

After months of squabbling with the hedge funds that hold billions in bond debt, PG&E said it secured a compromise plan with those investors. PG&E now has made deals with three of the main groups in its Chapter 11 bankruptcy case: wildfire victims, insurance companies and the bondholders.

“This agreement helps achieve our goals of fairly compensating wildfire victims, protecting customers’ bills and emerging from Chapter 11 as the utility of the future,” said PG&E Chief Executive Bill Johnson. Spokesmen for the bondholders declined comment.

Yet the company must still make peace with Newsom, who voiced strong objections Wednesday’s to PG&E’s plan to finance its exit from bankruptcy. The irate governor renewed his warnings that the state might take over the company if his demands for a “transformed utility” aren’t satisfied.

“They have to file a new plan,” Newsom’s spokesman Nathan Click said in an interview.

In a filing in U.S. Bankruptcy Court, lawyers for the governor officially protested PG&E’s request for court approval of its financing proposal, which calls for the utility to borrow billions of dollars in order to pay its bills and exit bankruptcy. Newsom said the plan is too heavily weighted with debt, hurting PG&E’s ability to strengthen its electrical grid and reduce wildfire risks.

Newsom’s lawyers complained that the PG&E plan would leave the utility with “insufficient financial flexibility to make billions of dollars in critically needed safety investments.”

Newsom filed his objections about two hours before PG&E announced it had reached a truce with its bondholders following several weeks of negotiations.