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WEIL, GOTSHAL & MANGES LLP

Stephen Karotkin (pro hac vice pending)

(stephen.karotkin@weil.com)

Jessica Liou (pro hac vice pending)

(jessica.liou@weil.com)

Matthew Goren (pro hac vice pending)

(matthew.goren@weil.com)

767 Fifth Avenue

New York, NY 10153-0119

Tel: 212 310 8000

Fax: 212 310 8007

KELLER & BENVENUTTI LLP

Tobias S. Keller (#151445)

(tkeller@kellerbenvenutti.com)

Jane Kim (#298192)

(jkim@kellerbenvenutti.com)

650 California Street, Suite 1900

San Francisco, CA 94108

Tel: 415 496 6723

Fax: 650 636 9251 

Proposed Attorneys for Debtors and Debtors 

in Possession

CRAVATH, SWAINE & MOORE LLP

Paul H. Zumbro (pro hac vice pending)

(pzumbro@cravath.com)

Kevin J. Orsini (pro hac vice pending)

(korsini@cravath.com)

Omid H. Nasab (pro hac vice pending)

(onasab@cravath.com)

825 Eighth Avenue

New York, NY 10019

Tel: 212 474 1000

Fax: 212 474 3700

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION

In re: 

PG&E CORPORATION

Debtor.

Tax I.D. No. 94-3234914

Case Nos. 19-30088

 19-30089

Chapter 11

DECLARATION OF DAVID KURTZ

IN SUPPORT OF DEBTORS’ MOTION 

PURSUANT TO 11 U.S.C. §§ 105, 362, 

363, 364, 503 AND 507 AND FED. R. 

BANKR. P. 2002, 4001, 6003, 6004 AND 

9014 FOR INTERIM AND FINAL 

ORDERS (I) AUTHORIZING THE 

DEBTORS TO OBTAIN SENIOR 

SECURED, SUPERPRIORITY, 

POSTPETITION FINANCING, 

(II) GRANTING LIENS AND 

In re: 

PACIFIC GAS AND ELECTRIC 

COMPANY

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Debtor.

Tax I.D. No. 94-0742640

SUPERPRIORITY CLAIMS,

(III) MODIFYING THE

AUTOMATIC STAY, 

(IV) SCHEDULING FINAL HEARING

AND (V) GRANTING RELATED 

RELIEF 

Date:

Time:

Place:

I, David Kurtz, pursuant to section 1746 of title 28 of the United States Code, hereby 

declare that the following is true to the best of my knowledge, information, and belief:

1. I am a Vice Chairman of U.S. Investment Banking and the Global Head of the 

Restructuring Group of Lazard Frères & Co. LLC (“Lazard”) and one of the lead restructuring 

advisors to PG&E Corporation (“PG&E Corp.”) and Pacific Gas and Electric Company 

(the “Utility” or the “Borrower”), as debtors and debtors-in-possession (collectively, “PG&E” or 

the “Debtors” and together with their non-Debtor subsidiaries, the “Company”) in the abovecaptioned Chapter 11 Cases (the “Chapter 11 Cases”). I submit this declaration (this 

“Declaration”) in support of the Motion of Debtors for Interim and Final Orders1(I) Authorizing 

the Debtors to Obtain Senior Secured, Superpriority, Postpetition Financing, (II) Granting Liens 

and Superpriority Claims, (III) Modifying the Automatic Stay, (IV) Scheduling a Final Hearing

and (V) Granting Related Relief, filed concurrently herewith (the “DIP Motion”).2

2. The statements in this Declaration are, except where specifically noted, based on 

my personal knowledge or opinion, on information that I have from PG&E’s books and records, 

PG&E’s employees, PG&E’s advisors and their employees, or from other members of the Lazard 

team working under my supervision or direction. Specifically, I have overseen a Lazard team 

which, since November 2018, has been one of the principal advisors to PG&E concerning the 

 

1 Motion of Debtors for Interim and Final Ordersis made pursuant to sections 105, 361, 362, 363, 364(c)(1), 364(c)(2), 

364(c)(3), 364(3) and 507 of title 11 of the United States Code (the “Bankruptcy Code”), Rules 2002, 4001, 6004 

and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rules 2002-1 and 4001-1 of 

the Bankruptcy Local Rules of the United States Bankruptcy Court for the Northern District of California (the “Local 

Rules”).

2 Capitalized terms used but not otherwise defined in this Declaration have the meanings used in the DIP Motion.

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possibility of restructuring under chapter 11. More generally, my colleagues at Lazard have 

provided various investment banking and financial advisory services to the Company for nearly a 

decade. In my capacity as Global Head of the Restructuring Group of Lazard, I have been privy 

to and have advised regarding PG&E’s decision to seek chapter 11 relief. I am not being 

specifically compensated for this testimony other than through payments received by Lazard as a 

professional whose retention the Debtors are seeking to obtain this Court’s approval of pursuant 

to an application to be filed with this Court at a later date. I am over the age of 18 years and 

authorized to submit this declaration on behalf of PG&E. If I were called upon to testify, I could 

and would competently testify to the facts set forth herein.

Qualifications

3. Since 2002, I have been employed by Lazard, the primary U.S. operating subsidiary 

of an international financial advisory and asset management firm. Lazard is registered as a brokerdealer with the Securities and Exchange Commission and the Financial Industry Regulatory 

Authority. Together with its predecessors and affiliates, Lazard has been advising clients around 

the world for more than 150 years. Lazard and its professionals have considerable expertise and 

experience in providing investment banking and financial advisory services to financially 

distressed companies and to creditors, equity holders, and other constituencies in reorganization 

proceedings and complex financial restructurings, both in and out of court. In addition, Lazard’s 

investment banking professionals have extensive experience in advising debtors in chapter 11 

cases and have served as investment bankers to numerous debtors, chapter 11 trustees, creditors’ 

committees, and buyers in chapter 11 proceedings.

4. I am currently a Vice Chairman of U.S. Investment Banking and the Global Head 

of Lazard’s Restructuring Group. I have a broad range of experience in financial advisory 

assignments, including extensive experience with advising companies, creditors, and investors in 

connection with numerous in-court and out-of-court restructurings, recapitalizations, financings 

and sale transactions. During the course of my career at Lazard, I have advised companies and 

creditor groups in connection with raising capital in the bankruptcy context, including assisting 

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chapter 11 debtors in obtaining and negotiating the terms of debtor-in-possession and exit 

financing loans. I also have extensive experience representing companies, creditors, and other 

constituencies in transactions involving the sale of all or substantially all of a company’s assets. 

Additionally, I have performed numerous enterprise valuations in the bankruptcy context. I have 

submitted declarations and provided expert testimony related to those matters in a number of 

chapter 11 cases.

5. Prior to joining Lazard, I was a partner at Mayer, Brown & Platt from 1986 to 1989, 

a partner at Jones Day from 1989 to 1999, and a senior partner in the Corporate Restructuring 

Department at Skadden, Arps, Slate, Meagher & Flom LLP from 1999 to 2002. I hold FINRA 

Series 7 General Securities Representative, Series 79 Investment Banking Representative, and 

Series 24 General Securities Principal licenses. I have a J.D. and B.A. from Case Western Reserve 

University. I am a fellow of the American College of Bankruptcy and served as a member of its 

board of directors from 2005 to 2011. I am also a frequent lecturer on bankruptcy and 

reorganization-related topics and I have co-authored “Representing the Unsecured Creditors’ 

Committee in Insolvency Restructurings”, Workout & Turnarounds II (1999), Wiley and Sons.

Background to the Proposed Postpetition Financing

6. Lazard has worked closely with the Debtors’ management and other professionals 

retained by the Debtors and has become well-acquainted with its capital structure, liquidity needs, 

business operations and regulatory environment. Contemporaneously with the Company’s 

consideration of a potential chapter 11 filing, Lazard worked closely with the Debtors’

management to evaluate chapter 11 financing needs and alternatives. As described in the Wells 

declaration, Lazard worked with the Company and its other advisors in connection with

adjustments made by the Debtors to their operating projections for chapter 11 impacts and to take 

into account the working capital decline anticipated to occur following expected ratings 

downgrades and the issuance of the notice required by SB-901. We also worked with the Company 

to develop a DIP financing structure suited to the Company’s borrowing needs. Through that work 

the Debtors concluded that maximizing revolving credit availability (including letter of credit 

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availability) would be to the Company’s advantage by allowing the Company to better match its 

borrowings to cash needs over time and thereby minimize interest costs.

Marketing and Negotiation of the DIP Facility

7. Leading up to the Petition Date, the Debtors, with the assistance of Lazard, engaged 

in a thorough and competitive marketing process to obtain postpetition DIP financing. 

8. The Debtors’ primary strategic considerations when marketing the financing 

opportunity was to (i) support the Debtors’ need to finance its operations, capital investments, 

working capital requirements and chapter 11 expenses for the pendency of the Cases, (ii) provide

substantial revolving credit capacity (including a Letter of Credit (“LC”) facility), (iii) provide the 

Company with operational and financial flexibility and time to pursue a holistic restructuring 

strategy to address wildfire claim resolution and other critical imperatives, and (iv) to secure 

committed financing at the most favorable terms to limit the debt service cost during these Cases. 

9. The Debtors, with the assistance of Lazard and AlixPartners, conducted financial 

analyses to size the proposed facility and analyze financing proposals. The analysis was based on 

the Debtors’ projected cash flow and liquidity needs through December 2020, taking into account 

the Company’s operating cash flows, required capital investments, interest and fees to finance 

these Cases, expected collateral postings and expenses to be paid in connection with the chapter 11 

process. Based on that analysis, the Debtors sought $5.5 billion of DIP financing.

10. In early January 2019, the Debtors, with the assistance of Lazard, began a 

marketing process to obtain postpetition financing. Given the size of the required financing, the 

Company’s cash flow profile, desired flexibility to use letters of credit to secure significant 

collateral posting requirements, and to minimize the debt service cost of the overall financing, the 

Debtors sought to obtain DIP financing comprised of a $3.5 billion revolving credit facility and 

$2 billion of term loan debt. 

11. On January 7, 2019, the Debtors, with the assistance of Lazard, contacted eight 

major money center banks (together, the “Potential Lenders”). Each of the eight Potential 

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Lenders signed a non-disclosure agreement (“NDA”) with PG&E and received an invitation to 

meetings with management later in the week. 

12. The Debtors and Lazard initially met with the Potential Lenders on January 9 and 

10, 2019, in individual meetings held in New York City. In order to fully evaluate the DIP 

financing request, the Potential Lenders were presented information with respect to a number of 

relevant issues including but not limited to (a) the context and reason for financing; (b) PG&E’s 

ongoing conversations with regulators, State government and other stakeholders; (c) an initial DIP 

financing term sheet (describing the framework for the potential DIP financing, but not economic 

terms); (d) a monthly financial forecast through December 2020 with underlying assumptions that 

provided estimates for the Company’s operations and included forecasts of costs related to 

chapter 11; and (e) the proposed timeline for negotiations and agreeing to terms with a Potential 

Lender. 

13. Subsequent to the meetings, Lazard provided Potential Lenders access to the 

Debtors’ virtual data room for lender diligence and solicited counterproposals in response. In the 

days following the initial meetings, the Debtors and their advisors engaged in multiple due 

diligence calls and conversations with the Potential Lenders. Ultimately, each of the eight 

Potential Lenders submitted initial, non-binding term sheets between January 10 and 12, 2019. In 

addition, all but one of the Potential Lenders provided a “highly confident letter” in response to 

the Company’s request indicating the Potential Lender’s belief that the Company could 

successfully obtain $5.5 billion of debtor in possession financing. 

14. The Debtors and Lazard evaluated these proposals side-by-side to compare terms 

and conditions on January 11 and 12, 2019. In evaluating the proposals, the Debtors and Lazard 

considered each Potential Lender’s indicative proposed economics, perceived ability to fully 

commit and underwrite the entire facility if needed, financing structure, perceived deal risk, market 

flex and proposed covenants, among other factors. Of the eight proposals, four offered a full 100% 

underwriting and four offered to provide only a portion of the requested DIP facilities.

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15. Following this review, the Debtors, with the assistance of Lazard, called each of 

the Potential Lenders to advise that a counterproposal would be coming later in the day and that to 

be considered in Round 2 the Potential Lender would need to offer a fully 100% underwritten deal.

In addition, Potential Lenders were asked to provide prepetition financing in the form of a 

$250,000,000 short-term loan facility (“Prepetition Bridge Facility”) to protect against the risk 

that the Debtors’ liquidity could be exhausted by working capital declines following the credit 

rating downgrades and related trade tightening and collateral demands expected as a result of the 

SB-901 notice. As planned, Lazard circulated a second round counterproposal to Potential Lenders 

on January 13, 2019, and asked Potential Lenders to provide comments by January 14, 2019. Six 

of the Potential Lenders submitted revised proposals on Monday, January 14, 2019, and most 

included the requested Prepetition Bridge Facility. The Debtors, with assistance from Lazard, then 

undertook similar quantitative and qualitative analyses to compare the updated proposals.

16. The Debtors determined that the revised proposal submitted by J.P. Morgan met 

each of their requirements and was the best financing proposal available. J.P. Morgan’s proposal 

was not only in line with the most favorable economic terms received by PG&E, but also offered 

the least restrictive covenants and the largest revolver hold position of all proposals received. 

17. The Debtors appointed J.P. Morgan as the lead arranger for the DIP financing on 

January 15, 2019. Based on other strong and competitive offers, Merrill Lynch, Pierce, Fenner & 

Smith Incorporated, Barclays and Citigroup were chosen by PG&E to co-arrange and underwrite

the DIP facility (collectively with J.P. Morgan, the “DIP Underwriters”; the DIP financing 

underwritten by the DIP Underwriters being the “DIP Facility”) on the condition that all of these 

additional DIP Underwriters likewise agree to the same level of revolver commitment hold 

position as J.P. Morgan and otherwise agree to the other terms and conditions of the final J.P. 

Morgan proposal. The large revolver hold position was important as it assured the Debtors of 

obtaining their desired $3.5 billion revolving credit facility. Between January 15 and January 21,

2019, the Debtors, with the assistance of Lazard, counsel and other advisors, negotiated the terms 

of the DIP Facility commitment papers, including a longer form term sheet (the “DIP Term 

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Sheet”). Simultaneously, the parties also negotiated the commitment letter and definitive 

documentation for the Prepetition Bridge Facility. These negotiations were conducted at arm’slength and were extensive and vigorous.

18. During the DIP marketing process, and more so following the filing of the Debtors’ 

January 14, 2019, Form 8-K, which provided public notice of the Debtors’ intended chapter 11 

filing, the Debtors received several reverse inquiries from various lending sources. The Debtors 

and Lazard investigated these inquiries and explored whether such institutions would be willing to 

provide financing on more competitive terms than those being negotiated with the DIP 

Underwriters. Only one alternative lender offered to provide a term loan facility on competitive 

terms but was unable to provide revolving credit in a similar structure and on terms similar to the 

DIP Underwriters’ proposal. In response to this specific reverse inquiry, the Debtors and Lazard 

further negotiated with J.P. Morgan and the other DIP Underwriters and were able to further 

improve economic terms and reduce market flex. It also became apparent through this dialogue 

that the revolving credit facility that the DIP Underwriters were providing might not be available 

(or if available, only on much more expensive terms) if the DIP Underwriters did not also arrange 

the term loan.

19. On January 21, 2019, the Debtors and the DIP Underwriters entered into a 

commitment letter and DIP Term Sheet for the $5.5 billion DIP Facility. Also, on the same date, 

PG&E Corp. and the Utility entered into a commitment letter with J.P. Morgan related to the 

Prepetition Bridge Facility. As of the Petition Date, the Debtors had not drawn on the Prepetition 

Bridge Facility.

Overview of the DIP Facility

20. A brief summary of the DIP Facility terms are provided below3:

DIP Facility $5.5 billion

- DIP Revolving Credit Facility: $3.5 billion, inclusive 

of $1.5 billion L/C Sub-Facility

 

3 Terms are subject to market flex and syndication.

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- DIP Term Loan Facility: $1.5 billion

- DIP Delayed Draw Term Loan: $500 million

Maturity Date December 2020 with a one-year extension subject to a 25 bps 

fee

Pricing DIP Revolving Credit Facility: L + 225 bps (37.5 bps unused 

fee); L/C Sub-Facility fronting fee of 12.5 bps per annum

DIP Term Loan Facility: L + 250 bps / 99.5 OID; ticking fees 

apply

DIP Delayed Draw Term Loan: L + 250 bps / 99.5 OID; 

unused fees apply

Interim 

Availability

DIP Revolving Credit Facility: $1.5 billion; cannot be repaid 

until Final Order (by April 15th)

DIP Term Loan Facility and DIP Delayed Draw Term Loan: 

Available at Final Order (by April 15th)

Prepayment DIP Revolving Credit Facility: fully prepayable

DIP Term Loan Facility and DIP Delayed Draw Term Loan: 

Prepayable subject to a 101 soft call for first 6 months, par 

otherwise

Collateral Superpriority administrative claim status; first lien on 

substantially all assets; DIP Revolving Credit Facility, DIP 

Term Loan Facility and DIP Delayed Draw Term Loan are 

secured on a pari passu basis

Incremental 

Facility

$4.0 billion with 50 bps MFN; 15 month sunset

21. The DIP Facility consists of three components: (a) a first lien superpriority 

revolving credit facility (the “DIP Revolving Credit Facility”) with aggregate commitments of 

$3.5 billion and a letter of credit sub-facility (the “DIP L/C Sub-Facility”) in an aggregate amount 

of $1.5 billion; (b) a term loan facility (the “DIP Term Loan Facility”) in an aggregate principal 

amount of $1.5 billion; and (c) a delayed draw term loan facility in an aggregate principal amount 

of $500 million (the “DIP Delayed Draw Term Loan”). The DIP Revolving Credit Facility is 

larger than similar DIP revolving credit facilities and allows the Company to limit overall debt 

service costs given the need for funds over the course of the duration of the facility; furthermore, 

the DIP L/C Sub-Facility is beneficial to the Company to meet ongoing letter of credit needs at an 

economically attractive price. PG&E may use the DIP Facility for working capital and general 

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corporate purposes, and to pay fees, costs and expenses incurred in connection with the 

administration of the Chapter 11 Cases.

22. The DIP Facility also provides flexibility to PG&E to use $4 billion of asset sale 

and condemnation proceeds for general corporate purposes; for any proceeds above the $4 billion 

carve-out, the Company maintains a reinvestment right of 180 days, subject to a further 180 day 

extension, thereby providing significant flexibility to PG&E to finance its business. Furthermore, 

the DIP Facility is structured with an extension option for a third year in order to accommodate 

the Company in the event that the Chapter 11 Cases extend beyond the original December 2020 

maturity date of the financing. The DIP Facility additionally provides the Company with 

permission to raise up to $4 billion of incremental, pari passu DIP financing to fund a third year 

of the Chapter 11 Cases and/or address other financing needs that result while in chapter 11.

23. The DIP Facility is unique for a postpetition financing facility of its size in that it 

provides PG&E with substantial flexibility to pursue their reorganization efforts. The DIP Facility 

does not subject PG&E to any milestones related to a sale or plan process, thereby enhancing the 

likelihood that PG&E will have adequate time and flexibility to develop and implement a 

restructuring that is in the best interests of their estates. Further, the DIP Facility contains no 

financial covenants. Accordingly, based upon the marketing process conducted, and due to the 

DIP Facility’s competitive economic terms and flexible structure, I believe it is the best financing 

currently available to PG&E.

24. It is my view that the DIP Facility provides a vehicle for PG&E to pursue a 

successful reorganization of their businesses. I believe that through a competitive process, PG&E 

was able to obtain the necessary financing on the best terms currently available in the market.

The Fees in Connection with the DIP Financings Are Reasonable

25. PG&E has agreed, subject to Court approval, to pay approximately $95.25 million 

in aggregate fees to the DIP Agents, arrangers, and the DIP Lenders pursuant to the DIP 

Documents as consideration for the extension of postpetition financing. These fees constitute 

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approximately 1.7% percent of the $5.5 billion DIP Facility being provided by the DIP 

Underwriters.

26. I believe that these fees were the subject of arms’-length and good-faith 

negotiations between PG&E and the DIP Underwriters, are integral components of the overall 

terms of the DIP Facility, and were required by the applicable DIP Underwriters as consideration 

for the extension of postpetition financing. Indeed, it is my belief that PG&E’s competitive DIP 

financing process and the ability to combine bank groups resulted in reductions in proposed fees 

and pricing over the course of negotiations. In light of PG&E’s circumstances, I believe that the 

fees provided for in the DIP Facility are reasonable.

The DIP Facility Should Be Approved

27. Based on the Debtors’ and their advisors’ efforts to market and negotiate the DIP 

Facility, current market conditions, PG&E’s circumstances, my experience and my participation 

in and supervision of the negotiations around the DIP Facility and the broader restructuring 

transaction, I believe that the DIP Facility represents the best option currently available to address 

PG&E’s liquidity needs and that the terms and conditions of the DIP Facility are the product of 

arm’s-length negotiations and are reasonable given the circumstances. 

28. I believe that PG&E will benefit from the strong message that the DIP Facility 

would likely provide to PG&E’s customers, vendors, employees, and contract counterparties 

regarding the sufficient funding of PG&E’s operations. I believe that this message will help to 

stabilize PG&E’s operations and supply chain at the outset of these Chapter 11 Cases, which will 

assist PG&E in continuing to provide natural gas and electric service to its millions of customers, 

and help to mitigate the possible substantial harm that commencement of these Chapter 11 Cases 

could have on the value of PG&E’s estates.

29. I further believe that the DIP Facility will help PG&E respond to the need for an 

orderly, fair and expeditious process to assess and resolve PG&E’s potential liabilities resulting 

from the 2017 and 2018 Northern California wildfires; and allow PG&E to preserve and maximize 

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the value of its business enterprise for the benefit of all of its economic stakeholders, including 

wildfire claimants, PG&E’s other creditors, and PG&E Corp.’s shareholders. 

30. Importantly, the DIP Facility does not provide for any significant case controls or 

milestones (other than those related to entry of the DIP Orders), providing PG&E with the type of 

flexibility that should increase the likelihood of a successful reorganization. It is my conclusion, 

therefore, that PG&E has evaluated all of their reasonably available options for postpetition 

financing within the timeframe available and that the DIP Facility represents the best currently 

available option for meeting PG&E’s financing needs.

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