1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WEIL, GOTSHAL & MANGES LLP

Stephen Karotkin (pro hac vice) 

(stephen.karotkin@weil.com) 

Ray C. Schrock, P.C. (pro hac vice) 

(ray.schrock@weil.com) 

Jessica Liou (pro hac vice) 

(jessica.liou@weil.com) 

Matthew Goren (pro hac vice) 

(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 

Attorneys for Debtors and Debtors in Possession

CRAVATH, SWAINE & MOORE LLP

Paul H. Zumbro (pro hac vice) 

(pzumbro@cravath.com) 

Kevin J. Orsini (pro hac vice) 

(korsini@cravath.com) 

Omid H. Nasab (pro hac vice) 

(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,

 - and - 

PACIFIC GAS AND ELECTRIC 

COMPANY,

Bankruptcy Case No. 19-30088 (DM)

Chapter 11 

(Lead Case) (Jointly Administered) 

DEBTORS’ MOTION FOR ENTRY OF 

ORDERS (I) APPROVING TERMS OF, AND 

DEBTORS’ ENTRY INTO AND 

PERFORMANCE UNDER, EXIT FINANCING 

COMMITMENT LETTERS AND (II) 

AUTHORIZING INCURRENCE, PAYMENT 

AND ALLOWANCE OF RELATED FEES 

AND/OR PREMIUMS, INDEMNITIES, COSTS 

AND EXPENSES AS ADMINISTRATIVE 

EXPENSE CLAIMS 

Date: November 13, 2019

Time: 10:00 a.m. (Pacific Time) 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

Objection Deadline: November 6, 2019

Debtors.

 Affects PG&E Corporation 

 Affects Pacific Gas and Electric 

Company 

Affects both Debtors 

* All papers shall be filed in the Lead Case, 

No. 19-30088 (DM). 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

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

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

above-captioned chapter 11 cases (the “Chapter 11 Cases”), hereby submit this motion (the 

“Motion”), pursuant to sections 105(a), 363(b), 503(b) and 507(a)(2) of title 11 of the United States 

Code (the “Bankruptcy Code”), and Rule 6004 of the Federal Rules of Bankruptcy Procedure (the 

“Bankruptcy Rules”), for entry of orders (i) approving the terms of, and the Debtors’ entry into 

and performance under, the Equity Backstop Commitment Letters and Debt Financing 

Commitment Letters (in each case, as defined below, and together, the “Exit Financing 

Commitment Letters”) and (ii) authorizing the incurrence, payment and allowance of all related 

fees and/or premiums, indemnities, costs and expenses (the “Exit Financing Obligations”) as 

administrative expense claims. 

In support of the Motion, the Debtors respectfully submit the Declaration of Kenneth 

S. Ziman (the “Ziman Declaration”), filed contemporaneously herewith. Proposed forms of 

orders granting the relief requested herein with respect to the Equity Backstop Commitment Letters 

and the Debt Financing Commitment Letters are attached to this Motion as Exhibit A and Exhibit 

B, respectively (collectively, the “Proposed Orders”).1

1

 The Proposed Orders with respect to the Equity Backstop Commitment Letters and the Debt 

Financing Commitment Letters have been separated for administrative purposes and for ease of 

reference. 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF CONTENTS 

Page 

I. PRELIMINARY STATEMENT ...............................................................................................1

II. JURISDICTION ........................................................................................................................7

III. BACKGROUND .......................................................................................................................7

A. The Debtors’ Plan ..........................................................................................................7

B. The Equity Backstop Commitment Letters....................................................................8

C. The Debt Financing Commitment Letters ...................................................................10

D. Certain Key Terms and Provisions of the Exit Financing Commitment Letters 

and the Proposed Orders ..............................................................................................12

IV. BASIS FOR RELIEF REQUESTED ......................................................................................25

A. Entry into the Exit Financing Commitment Letters is a Sound Exercise of the 

Debtors’ Business Judgment and is in the Best Interests of Their Estates. .................25

B. Payment and Allowance of the Exit Financing Obligations as Administrative 

Expense Claims Should Be Approved Because They are Reasonable, MarketBased and Essential Terms of the Exit Financing Commitment Letters. ....................28

V. WAIVER OF BANKRUPTCY RULE 6004(h) ......................................................................32

VI. NOTICE ...................................................................................................................................32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF AUTHORITIES 

 Page(s) 

Cases 

In re AbitibiBowater Inc., 

418 B.R. 815 (Bankr. D. Del. 2009) ..............................................................................................26 

In re Adelphia Commc’ns Corp., 

No. 02-41729 (REG), 2004 WL 1634538 (Bankr. S.D.N.Y. June 22, 2004) ..............................2, 5 

Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns-Manville 

Corp.), 

60 B.R. 612 (Bankr. S.D.N.Y. 1986) .............................................................................................26 

Crystalin, L.L.C. v. Selma Props. Inc. (In re Crystalin, L.L.C.), 

293 B.R. 455 (B.A.P. 8th Cir. 2003)..............................................................................................26 

In re Excel Innovations, Inc., 

502 F.3d 1086 (9th Cir. 2007) .......................................................................................................26 

Four B. Corp. v. Food Barn Stores, Inc. (In re Food Barn Stores, Inc.), 

107 F.3d 558 (8th Cir. 1997) .........................................................................................................26 

In re Hexion Holdings LLC, 

No. 19-10684 (KG), (Bankr. D. Del. May 15, 2019) ............................................26, 27, 29, 31, 32 

In re Integrated Resources, Inc., 

147 B.R. 650 (Bankr. S.D.N.Y. 1992) ...........................................................................................26 

In re Monitronics International, Inc., 

No. 19-33650 (DRJ) (Bankr. S.D. Tex. July 30, 2019) .................................................................29 

In re Montgomery Ward Holding Corp., 

242 B.R. 147 (D. Del. 1999) ..........................................................................................................26 

In re Pacific Drilling S.A., 

No. 17-13193 (MEW) (Bankr. S.D.N.Y. Sept. 25, 2018) .............................................................29 

In re Robles, 

No. 14-51812 (ASW), 2014 WL 3715092 (Bankr. N.D. Cal. July 24, 2014) ...............................26 

Smith v. Van Gorkom, 

488 A.2d 858 (Del. 1985) ..............................................................................................................26 

In re Station Casinos, Inc., 

No. BK-09-52477 (GWZ), 2010 Bankr. LEXIS 5447 (Bankr. D. Nev. Feb. 2, 

2010) ..............................................................................................................................................25 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In re Ultra Petroleum Corp., 

No. 16-32202 (MI) (Bankr. S.D. Tex. Feb. 13, 2017) .................................................................2, 5 

In re Utah 7000, L.L.C., 

No. 08-21869 (JB), 2008 WL 2654919 (Bankr. D. Utah July 3, 2008) ..........................................2 

Statutes & Rules 

11 U.S.C. § 105 ....................................................................................................................................27 

11 U.S.C. § 105(a) ...............................................................................................................................26 

11 U.S.C. § 362 ....................................................................................................................................25 

11 U.S.C. § 363 ....................................................................................................................................27 

11 U.S.C. § 363(b) ...............................................................................................................................26 

11 U.S.C. § 363(b)(1) ..........................................................................................................................25 

11 U.S.C. § 503(b) .........................................................................................................................31, 32 

11 U.S.C. § 507(a)(2) ...........................................................................................................................29 

11 U.S.C. § et seq......................................................................................................................... passim

28 U.S.C. § 157 ......................................................................................................................................7 

28 U.S.C. § 157(b) .................................................................................................................................7 

28 U.S.C. § 1334 ....................................................................................................................................7 

28 U.S.C. § 1408 ....................................................................................................................................7 

28 U.S.C. § 1409 ....................................................................................................................................7 

Fed. R. Bankr. P. 2002 .........................................................................................................................33 

Fed. R. Bankr. P. 6004(h) ....................................................................................................................32 

Internal Revenue Code Section 382 .....................................................................................................13 

Rule 5011-1(a) .......................................................................................................................................7 

Rule 5110 .............................................................................................................................................23 

Other Authorities 

California Assembly Bill 1054 .................................................................................................... passim
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General 

Order 24 (N.D. Cal.) ........................................................................................................................7 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

MEMORANDUM OF POINTS AND AUTHORITIES 

I. PRELIMINARY STATEMENT 

On September 9, 2019, the Debtors filed their initial Joint Chapter 11 Plan of 

Reorganization [Docket No. 3841] (as amended, supplemented or otherwise modified from time to 

time, the “Plan”). The Plan, which was subsequently amended to reflect an $11 billion settlement 

with holders of subrogation claims [Docket No. 3966], is designed to (a) pay all prepetition wildfire 

claims in full, (b) achieve a rate-neutral solution, on average, for customers, (c) meet the June 30, 2020 

deadline for Plan confirmation established by California Assembly Bill 1054 (“AB 1054”), (d) obtain 

all necessary regulatory approvals, (e) support California’s clean energy goals and (f) ensure that the 

reorganized Debtors have sufficient liquidity upon emergence to continue providing safe, clean and 

reliable electricity and natural gas to California residents. 

In order to satisfy those objectives, the Debtors must have sufficient financing to 

consummate the Plan. The Plan contemplates multiple sources of funding, the foundations of which 

are the issuance of $14 billion in reorganized PG&E Corp. common stock (“New PG&E Corp. 

Common Stock”), to be used to fund payments under the Plan to wildfire victims, and the incurrence 

of $34.35 billion in senior debt obligations (the “New Debt”), to, among other things, refinance prepetition high-coupon Utility bonds2

 and fund the payment in full, in cash, of the Debtors’ obligations 

under their debtor-in-possession financing facilities. 

2

 The Debtors expect the incurrence of new long-term bonds at the Utility could save the Debtors 

over $170 million per year in interest expense as compared to the existing high-coupon bonds, which 

savings would accrue to the benefit of the Debtors’ ratepayers. (Ziman Decl. ¶ 20.) As of the date of 

their most recent Verified Statement [Docket No. 4369 Ex. A], the Ad Hoc Group of Senior Unsecured 

Noteholders (the “Ad Hoc Noteholder Committee”) held approximately $11.2 billion in these bonds 

(which holdings increased by over $1.5 billion since the Ad Hoc Noteholder Committee’s prior 

Verified Statement [Docket No. 3083 Ex. A], filed before the termination of exclusivity). 

Accordingly, the plan of reorganization (the “Noteholder Plan”) proposed by the Ad Hoc Noteholder 

Committee and the Official Committee of Tort Claimants needlessly provides for the reinstatement of 

the long-term Utility bonds, which only serves to enrich the members of the Ad Hoc Noteholder 

Committee to the detriment of the Debtors’ other stakeholders. [Docket No. 4257.] The Debtors have 

proposed a Plan that refinances these high-coupon bonds with new, cheaper debt to maximize the 

value of their estates for the benefit of all stakeholders. 
 2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Given the importance of such financing, the Debtors, in the exercise of their business 

judgment, have obtained equity and debt financing commitments to provide assurances that they will 

have access to sufficient capital on the effective date of the Plan (the “Effective Date”). Under the 

equity commitment letters executed by PG&E Corp. (each in substantially the form attached to this 

Motion as Exhibit C, and collectively, the “Equity Backstop Commitment Letters”), the parties 

identified on Exhibit D (collectively, the “Equity Backstop Parties”) have severally committed to 

purchase up to $14 billion in New PG&E Corp. Common Stock (collectively, the “Equity Backstop 

Commitments”) on the Effective Date, on the terms and subject to the conditions set forth in the 

Equity Backstop Commitment Letters. Under the bridge commitment letters entered into by PG&E 

Corp. and the Utility on October 11, 2019 (collectively, the “Bridge Commitment Letters”)3, certain 

money-center banks have agreed to backstop the New Debt incurrences contemplated by the Plan 

(collectively, the “Bridge Commitments” and, together with the Equity Backstop Commitments, the 

“Exit Financing Commitments”), on the terms and subject to the conditions set forth in the Bridge 

Commitment Letters. The Debtors anticipate effectuating the equity and debt issuances contemplated 

by the Plan through market transactions in order to obtain the most favorable pricing and other terms. 

However, the Debtors have obtained these “backstop” commitments for the sake of certainty that 

sufficient funds will be available on the Effective Date even if market conditions deteriorate and the 

contemplated exit financing cannot be obtained on more favorable terms. 

By this Motion, the Debtors seek approval of the terms of, and their entry into and 

performance under, these Exit Financing Commitments. Under the Bankruptcy Code, the decision of 

a debtor-in-possession to obtain financing commitments is entitled to deference under the business 

judgment rule. See, e.g., In re Adelphia Commc’ns Corp., No. 02-41729 (REG), 2004 WL 1634538, 

at *2 (Bankr. S.D.N.Y. June 22, 2004); In re Ultra Petroleum Corp., No. 16-32202 (MI) (Bankr. S.D. 

Tex. Feb. 13, 2017) (ECF No. 1126); In re Utah 7000, L.L.C., No. 08-21869 (JB), 2008 WL 2654919, 

3

 The Bridge Commitment Letters entered into by PG&E Corp. and the Utility are attached to 

this Motion as Exhibit E and Exhibit F, respectively. 
 3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

at *2–3 (Bankr. D. Utah July 3, 2008). The Debtors’ business judgment is amply demonstrated here, 

where the Exit Financing Commitments have been obtained on favorable terms and in amounts 

sufficient to allow the Debtors to successfully emerge from chapter 11 in the event market financing 

is unavailable. 

The Equity Backstop Commitment Letters. The terms of the Equity Backstop 

Commitment Letters afford the Debtors unprecedented flexibility in financing their emergence from 

the Chapter 11 Cases. (Ziman Decl. ¶ 18.) Although equity backstop commitment letters often require 

a debtor to consummate a particular type of equity offering—typically, a rights offering—the Equity 

Backstop Commitments here provide the Debtors with the flexibility to raise market-priced equity in 

the public and private markets4 while still ensuring that the needed capital will be available if those 

offerings are not consummated in time for the Debtors to emerge in accordance with the timelines in 

AB 1054. Specifically: 

 At equity valuations above a 13.5x implied price-to-earnings multiple (subject to 

adjustment based on changes in utility market indices), the Debtors are afforded 

discretion as to the type of primary equity offering that is consummated. 

 Even at certain lower valuations, the Debtors may raise up to 20% of the equity 

proceeds in a widely-syndicated equity offering or, subject to certain consent rights, a 

private offering, with the remainder raised through a rights offering. 

As equity is raised, the Equity Backstop Commitments (and associated future premiums) are reduced 

in accordance with the terms of the Equity Backstop Commitment Letters. Also, and importantly, the 

4

 The backstop provided by the Equity Backstop Parties compares favorably to the equity 

financing proposed by the Ad Hoc Noteholder Committee, as set forth in their commitment letter filed 

with the Court on October 3, 2019 [Docket No. 4079 Ex. A] (the “Ad Hoc Noteholder Commitment 

Letter”) and embodied in the Noteholder Plan. Instead of permitting market-based financing, the 

Noteholder Plan provides for a hard-wired new-money equity investment by members of the Ad Hoc 

Noteholder Committee at a $3 billion discount. This would result in the Ad Hoc Noteholder 

Committee owning more than 50% of the post-emergence equity of reorganized PG&E Corp. even if 

more attractive financing is available in the market, representing an attempt by the Ad Hoc Noteholder 

Committee to seize control of the Debtors at a substantial discount. A plan geared toward maximizing 

value should encourage (or at least permit) market offerings. 
 4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Equity Backstop Commitment Letters (and the contemplated equity issuances and rights offerings) are 

structured in a manner that preserves the Debtors’ significant net operating loss carryforwards and 

other tax attributes, which is important to maximizing the value of the Debtors’ estates. (Id. ¶ 14.) 

Moreover, given the inherent uncertainty of these Chapter 11 Cases, the Debtors 

negotiated for significant flexibility as to the length of the Equity Backstop Commitments. Subject to 

the terms of the Equity Backstop Commitment Letters, the commitments may be maintained for over 

300 days, a significant duration for a transaction of this complexity. Given the length of the 

commitments, the Equity Backstop Parties required certain termination rights and conditions 

precedent to their funding obligations, principally regarding unexpected material adverse events such 

as pre-petition wildfire claims exceeding an agreed threshold, adverse regulatory determinations, 

significant post-petition wildfires and material non-ordinary course asserted administrative expense 

claims. With that in mind, the Debtors negotiated for most commitment premiums to be earned only 

as the Equity Backstop Parties’ termination rights fall away and as conditionality is reduced.5 

Although the Equity Backstop Commitments are scheduled to expire initially on January 20, 2020, the 

Debtors, in their sole discretion, may extend the commitments three times: (1) to April 30, 2020 for 

an additional premium of 1.25%, (2) to June 30, 2020 for an additional premium of 2.50% and (3) to 

August 29, 2020 for an additional premium of 0.50%. These extension dates were selected to afford 

the Debtors discretion at key inflection points in the Chapter 11 Cases and to allow the Debtors to 

accept superior financing opportunities, if presented, with limited sunk costs. Subject to the 

occurrence of the Effective Date, these commitment premiums will be paid in New PG&E Corp. 

Common Stock. 

5

 Notably, the Noteholder Plan provides for all financing fees to be earned upfront, with no 

attempt to mitigate the conditionality in the Ad Hoc Noteholder Commitment Letter. These fees are 

payable not to third party institutions (as with the Exit Financing Commitments), but rather to the same 

members of the Ad Hoc Noteholder Committee that, by design, will be purchasing the post-emergence 

equity. In effect, the Ad Hoc Noteholder Committee is seeking to pay itself a fee to acquire a majority 

of reorganized PG&E Corp. equity at a substantial discount. 
 5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The Debt Financing Commitment Letters. In addition to the Equity Backstop 

Commitments, PG&E Corp. and the Utility have executed the Bridge Commitment Letters with certain 

money-center banks, which provide for 364-day6 bridge loan facilities (the “Bridge Facilities”)—in 

aggregate amounts of $7.0 billion for PG&E Corp. and $27.35 billion for the Utility—that would be 

funded on the Effective Date in the event the Debtors are otherwise unable to issue sufficient New 

Debt. In addition, the Debtors have executed fee letters (the “Bridge Fee Letters”), which provide 

for, among other things, the payment of certain fees associated with the Bridge Facilities, and 

engagement letters (the “Debt Financing Engagement Letters”)7, which engage the same banks to 

arrange the New Debt.8 The Debtors do not currently anticipate drawing on the Bridge Facilities, and 

expect instead to issue new long-term bonds and incur new credit facilities on market terms at or prior 

to emergence,9 but the Bridge Facilities provide assurances that sufficient funds will be available if 

these debt financings cannot be consummated. 

6

 The 364-day period begins with the funding of the Bridge Facilities. As noted above, the 

Debtors do not expect to draw upon the Bridge Facilities, but instead expect to avail themselves of 

market financing between now and the Effective Date. (Ziman Decl. ¶ 22.) Even if the Bridge 

Facilities were to be funded, they are likely to be refinanced well in advance of their 364-day maturity. 

(Id.) Courts in other large, complex bankruptcies have approved debtors’ entry into commitment 

letters for facilities of a similar duration. See, e.g., In re Adelphia Commc’ns Corp., 2004 WL 

1634538, at *7 (Bankr. S.D.N.Y. June 22, 2004) (approving commitment letters providing for a bridge 

facility with a one year maturity); In re Ultra Petroleum Corp., No. 16-32202 (MI) (Bankr. S.D. Tex. 

Feb. 13, 2017) (ECF No. 1126) (same).

7

 The Debt Financing Engagement Letters, the Bridge Commitment Letters and the Bridge Fee 

Letters are collectively referred to in this Motion as the “Debt Financing Commitment Letters”. 

8

 Redacted copies of the Debt Financing Engagement Letters are attached hereto as Exhibit G

(the “Bank Financing Engagement Letter”) and Exhibit H (the “Securities Engagement Letter”). 

Simultaneous with the filing of this Motion, the Debtors are filing a motion seeking authority to file 

the Debt Financing Engagement Letters in redacted form and the Bridge Fee Letters under seal (the 

“Sealing Motion”). As more fully set forth in the Sealing Motion, unredacted copies of such letters 

have been provided to the Bankruptcy Court, the Office of the United States Trustee and advisors to 

the Official Committee of Unsecured Creditors and Official Committee of Tort Claimants on a 

confidential and professionals’ eyes only basis. 

9

 As with the equity financing, the Noteholder Plan contemplates the PG&E Corp. debt financing 

to only be offered to members of the Ad Hoc Noteholder Committee, rather than allowing the Debtors 

to obtain market-based financing on better terms. Though the Noteholder Plan technically permits the 
 6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The Debt Financing Commitment Letters, like the Equity Backstop Commitment 

Letters, afford the Debtors significant flexibility in structuring the New Debt. The Debtors, in their 

business judgment, may incur debt securities, credit facilities and securitization bonds or facilities at 

any time on or prior to the Effective Date, allowing the Debtors to avail themselves of attractive market 

conditions that may arise during the pendency of these cases.10 The Bridge Commitments will be 

reduced on a dollar-for-dollar basis by the net cash proceeds of any such incurrences. The Debt 

Financing Commitment Letters also permit the Debtors to incur the revolving credit facilities 

contemplated by the Plan to ensure adequate liquidity at emergence, without any corresponding 

reduction to the Bridge Commitments. 

The Bridge Commitments, like the Equity Backstop Commitments, extend through 

August 29, 2020, on terms that are consistent with (or better than) market. The significant duration of 

the Bridge Commitments comes with conditionality and termination rights, which broadly align with 

those under the Equity Backstop Commitment Letters and are otherwise limited to customary bridge 

financing conditions. As with the equity premiums, the Debtors negotiated the Bridge Facilities so 

that most of the associated fees are incurred over time as conditionality and termination rights fall 

away. (See Ziman Decl. ¶ 27.) 

Together, the Equity Backstop Commitment Letters and the Debt Financing 

Commitment Letters benefit the estates by providing assurances of the Debtors’ ability to fund the 

Debtors to issue new Utility debt to third parties, it may only be offered on terms “acceptable to” the 

Ad Hoc Noteholder Committee. See Ad Hoc Noteholder Commitment Letter § 1(c); see also

Noteholder Plan §§ 1.138-1.140, 1.142. Moreover, the incurrence of new secured Utility debt under 

the Noteholder Plan would cause the long-term Utility bonds held by the Ad Hoc Noteholder 

Committee (and which the Noteholder Plan inexplicably proposes to reinstate) to be “equally and 

ratably” secured as a result of certain provisions in the pre-petition indentures. In reinstating this highcoupon debt, the Ad Hoc Noteholder Committee would receive the best of both worlds, to the 

detriment of the Debtors’ other stakeholders—bonds that are both expensive and secured on a firstpriority basis. This debt financing structure would divert value from the Debtors’ stakeholders to the 

Ad Hoc Noteholder Committee. 

10 Although the Debtors do not currently expect to do so, the Debt Financing Commitment Letters 

also allow the Debtors to reinstate all or a portion of their pre-petition funded indebtedness. 
 7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

distributions contemplated by the Plan and the Debtors’ emergence from the Chapter 11 Cases. For 

all the above reasons and as discussed further below, the Debtors have determined, in their business 

judgment, that the Equity Backstop Commitment Letters and the Debt Financing Commitment Letters 

are in their best interests and in the best interests of their estates, creditors, shareholders and all parties 

in interest. The Debtors respectfully request the Court’s approval of the terms of, and the Debtors’ 

entry into and performance under, the Exit Financing Commitment Letters and authority to incur and 

pay the obligations set forth therein. 

II. JURISDICTION 

The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157 and 

1334, the Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General Order 

24 (N.D. Cal.), and Rule 5011-1(a) of the Bankruptcy Local Rules for the United States District Court 

for the Northern District of California. This is a core proceeding pursuant to 28 U.S.C. § 157(b). 

Venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and 1409. The Debtors submit that 

the Court may enter the Proposed Orders as final orders consistent with Article III of the United States 

Constitution. 

III. BACKGROUND 

A. The Debtors’ Plan 

On September 9, 2019, the Debtors filed their Plan, which proposed a rate-neutral 

framework to fairly compensate wildfire victims and other stakeholders, prioritized the interests of 

PG&E customers and communities and met PG&E’s legal obligations. [Docket No. 3841.] The 

Debtors concurrently filed a Summary of the Key Elements of the Debtors’ Plan. [Docket No. 3844.] 

On September 13, 2019, the Debtors announced an agreement in principle with entities 

holding approximately 85% of insurance subrogation claims to resolve all insurance subrogation 

claims arising out of the 2017 and 2018 wildfires for $11 billion pursuant to the Plan (the 

“Subrogation Settlement”). On September 22, 2019, the Debtors executed a Restructuring Support 

Agreement (the “Subrogation RSA”) with those entities, reflecting the Subrogation Settlement. The 

Subrogation Settlement followed the Debtors’ June 18, 2019 settlement with certain local public 
 8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

entities (the “Public Entities Settlement”), which provides for an aggregate of $1 billion to be paid 

to such public entities in full satisfaction of their claims against the Debtors’ estates. The Subrogation 

Settlement was incorporated into an amended Plan filed by the Debtors on September 23, 2019. 

[Docket No. 3966.] 

In addition to the Subrogation Settlement and the Public Entities Settlement, the Plan, 

as amended, provides for (i) compensation of individual wildfire victims and certain public entities 

from a trust funded for their benefit in an amount not to exceed $8.4 billion, (ii) payment in full, with 

interest at the legal rate, of all prepetition funded debt obligations, all prepetition trade claims and 

employee-related claims, (iii) assumption of all power purchase agreements and community choice 

aggregation servicing agreements, (iv) assumption of all pension obligations, other employee 

obligations and collective bargaining agreements with labor, (v) future participation in the state 

wildfire insurance fund (the “Go-Forward Wildfire Fund”) established by AB 1054 and (vi) 

satisfaction of the legislative requirements of AB 1054. 

 The Plan contemplates various sources of funding, including (a) new equity issuances, 

(b) the issuance or incurrence of new debt at both the PG&E Corp. and Utility levels, (c) if available 

(but not required), wildfire recovery or similar bonds (“Wildfire Victim Recovery Bonds”) and (d) 

cash on hand. 

 On October 9, 2019, the Court entered an order terminating, solely as to the Official 

Committee of Tort Claimants and the Ad Hoc Noteholder Committee, the Debtors’ exclusive periods 

to file and solicit their Plan, ordering the Ad Hoc Noteholder Committee and the Official Committee 

of Tort Claimants to file their proposed competing plan no later than October 17, 2019 and setting a 

status conference on the competing plans for October 23, 2019. [Docket No. 4167.] The Noteholder 

Plan was filed on October 17, 2019. 

B. The Equity Backstop Commitment Letters 

In August 2019, the Debtors began a dialogue with two current PG&E Corp. 

shareholders, Knighthead Capital Management, LLC (“Knighthead”) and Abrams Capital 

Management, L.P. (“Abrams”), who had publicly expressed interest in providing equity backstop 
 9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

commitments to allow the Debtors to fund their Plan. (Ziman Decl. ¶ 8.) Subsequently, the Debtors 

received substantially similar equity capital commitments from more than 35 investors, representing 

equity backstop commitments in excess of $14 billion in the aggregate. (Id.) 

The Debtors also engaged in discussions with certain money-center banks to determine 

whether such banks would be willing to provide equity backstop commitments on the same or better 

terms as those proposed by the shareholders. The Debtors found that such banks were willing to 

guarantee the necessary equity proceeds to the Debtors (i.e., a volume underwriting), but were unable 

to agree to a floor price at which such equity would be raised. (Id. ¶ 7.) The arrangement proposed 

by these banks would present a significant risk that PG&E Corp. would be required to issue a 

substantially greater percentage of its common shares for the same aggregate proceeds received by the 

Debtors under the Equity Backstop Commitment Letters. (Id.) Accordingly, in consultation with their 

financial advisors, the Debtors determined the backstop commitments offered by Knighthead and 

Abrams, which offered both a guarantee of necessary equity proceeds and a floor price (with no

“market” out), were the better course for the Debtors and their stakeholders. (Id. ¶¶ 7–9.) 

Over the course of extensive negotiations with Knighthead, Abrams and their advisors, 

the Debtors improved upon many of the terms initially proposed, including structure, conditionality, 

length of commitment and flexibility to pursue a variety of equity financing options. (Id. ¶ 9.) On 

September 9, 2019, PG&E Corp. executed the Equity Backstop Commitment Letters with Knighthead 

and Abrams as initial Equity Backstop Parties. (Id.) The initial Equity Backstop Commitment Letters 

were subsequently amended and restated on September 13 to, among other things, incorporate the 

terms of the Subrogation Settlement. (Id. ¶ 10.)

After September 13, the Debtors engaged with other parties, including other current 

shareholders and non-shareholders (including bondholders and parties not currently invested in the 

Debtors’ equity or debt securities)11, to obtain commitments from such parties as well. By 

11 Though the Equity Backstop Commitment Letters were originally negotiated with Knighthead 

and Abrams, two existing equityholders, 40% of the Equity Backstop Commitments were available 

for allocation based on the offered amount of commitments (rather than shareholdings), meaning that 

non-equityholders could also participate. In addition, non-equityholders were permitted to purchase 
 10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

September 20, the Debtors had received more than the $14 billion in Equity Backstop Commitments 

contemplated by the Plan. (Id. ¶¶ 11–12.) Accordingly, on September 30, the Equity Backstop 

Commitments were allocated as between the Equity Backstop Parties in accordance with the allocation 

mechanisms set forth in the Equity Backstop Commitment Letters, achieving total Equity Backstop 

Commitments of $14 billion. (Id. ¶ 13.) 

The Equity Backstop Commitment Letters require the Equity Backstop Parties to 

purchase up to $14 billion in New PG&E Corp. Common Stock, on the terms and subject to the 

conditions thereof, at a price per share that would imply a price-to-earnings multiple of 10x (subject 

to certain adjustments) based on Normalized Estimated Net Income for 2021. See Equity Backstop 

Commitment Letters § 1(a)(iv). The Debtors are not obligated under all circumstances to issue such 

shares to the Equity Backstop Parties, but instead are permitted, at higher implied price-to-earnings 

multiples, to consummate other equity offerings (including primary equity offerings and rights 

offerings). See id. at §§ 1(a)(i), (ii). In the event that such other equity offerings (together with other 

permitted capital sources) do not raise $14 billion of proceeds in the aggregate, the Debtors must draw 

on the Equity Backstop Commitments, subject to the satisfaction or waiver of the conditions in the 

Equity Backstop Commitment Letters. See id. at § 1(a)(iv). 

Certain key terms and provisions of the Equity Backstop Commitment Letters are 

summarized in Section III.D below. 

C. The Debt Financing Commitment Letters 

Since the second quarter of 2019, the Debtors and their financial advisors have 

maintained a dialogue with several prominent money-center banks regarding debt financing 

alternatives for the Debtors’ emergence from chapter 11. (Ziman Decl. ¶ 21.) These conversations 

culminated in several banks providing illustrative financing structures and terms in the third quarter 

shares between the time they delivered their commitments and the allocation date, with any additional 

shares acquired counted for allocation purposes. The Debtors actively engaged non-equityholders 

during the syndication of the Equity Backstop Commitments and encouraged them to take advantage 

of these provisions. In short, the Debtors provided non-equityholders with a meaningful opportunity 

to participate in the Equity Backstop Commitments. (Ziman Decl. ¶¶ 11–12.) 
 11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

of 2019. Incorporating the feedback received from these banks, the Debtors developed an exit 

financing strategy that they believe maximizes the value of their estates for the benefit of all 

stakeholders—incurring new, less expensive long-term debt in place of the Debtors’ pre-petition highcoupon debt.12 New long-term debt at the Utility could save the Debtors over $170 million per year 

in interest expense as compared to existing high-coupon bonds, resulting in nearly $1.5 billion (on a 

net present value basis) in savings. (Id. ¶ 20.) 

On September 25 and 26, the Debtors and their financial advisors contacted several 

money-center banks requesting initial proposals for bridge financing, a short-term debt financing 

option that is designed to provide certainty that sufficient funds will be available on the Effective Date 

if market financing is either more expensive or unavailable. (Id. ¶¶ 22–23.) All the banks contacted 

delivered proposals by October 1. (Id. ¶ 23.) The Debtors, in consultation with their legal and financial 

advisors, evaluated these proposals based on a number of metrics, including the proposed terms and 

fees, the cost and certainty of the commitments, the experience and reputations of the parties and the 

ability of such banks to work collaboratively with the Debtors. (Id. ¶ 24.) The Debtors developed and 

shared a counterproposal with all the banks. After discussions with the banks, the Debtors selected 

JPMorgan Chase Bank, N.A. (“JPMorgan”), Bank of America, N.A. (“BANA”), BofA Securities, 

Inc. (“BofA” and, together with BANA, “Bank of America”), Barclays Bank PLC (“Barclays”), 

Citigroup Global Markets Inc. (“Citi”), Goldman Sachs Bank USA (“GS Bank”) and Goldman Sachs 

Lending Partners LLC (together with GS Bank, “Goldman Sachs”; JPMorgan, Bank of America, 

12 As noted above, the Noteholder Plan seeks to reinstate the Debtors’ long-term Utility bonds, 

which would serve no purpose other than to enrich the Ad Hoc Noteholder Committee and the other 

noteholders at the expense of the Debtors’ other stakeholders, including California ratepayers. 

Recognizing the significant profit that they stand to gain (to the detriment of the Debtors’ other 

stakeholders) if these high-coupon Utility bonds are reinstated, the members of the Ad Hoc Noteholder 

Committee have increased their holdings of Utility bonds by over $1.5 billion since their last Verified 

Statement. [Docket Nos. 3083, 4369.] 
 12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Barclays, Citi and Goldman Sachs, collectively, the “Initial Bridge Commitment Parties”

13) to act 

as initial commitment parties with respect to the contemplated bridge facilities. (Id.) 

Following extensive negotiations during the week of September 30 with the Initial 

Bridge Commitment Parties, which negotiations improved on many of the terms initially proposed by 

such banks (including pricing, fees, flexibility, conditionality and “alternate transaction” provisions), 

the Initial Bridge Commitment Parties delivered signed Debt Financing Commitment Letters on 

October 4, 2019. [Docket No. 4119-2.] On October 11, following deliberations, the Boards of 

Directors of each of PG&E Corp. and the Utility approved the Debtors’ entry into the Debt Financing 

Commitment Letters, which were executed by the Debtors on the same day. 

Certain key terms and provisions of the Debt Financing Commitment Letters are 

summarized in Section III.D below. 

D. Certain Key Terms and Provisions of the Exit Financing Commitment Letters 

and the Proposed Orders 

Certain key terms and provisions of the Equity Backstop Commitment Letters are 

summarized as follows:14

Equity 

Backstop 

Commitments 

See Equity 

Backstop 

Commitment 

Letters § 2(a); 

Exhibit A to 

Equity Backstop 

In the aggregate, the Equity Backstop Parties have severally committed to 

fund $14 billion to PG&E Corp. on the Effective Date to finance the payments 

to wildfire victims contemplated by the Plan, in consideration of the issuance 

of New PG&E Corp. Common Stock to the Equity Backstop Parties on the 

Effective Date, subject to the terms and conditions set forth in each Equity 

Backstop Commitment Letter. The price at which any such new shares would 

be issued to the Equity Backstop Parties (the “Equity Backstop Price”) 

would equal (a) 10 (subject to downward adjustment based on changes in the 

Applicable Utility Index Multiple), times (b) PG&E Corp.’s consolidated 

13 The Initial Bridge Commitment Parties, together with any other parties that become party to 

the Debt Commitment Letters as additional “Commitment Parties”, are collectively referred to as the 

“Bridge Commitment Parties”, and the Bridge Commitment Parties and the Equity Backstop Parties 

are collectively referred to as the “Exit Commitment Parties”. 

14 This summary is qualified in its entirety by reference to the provisions of the Equity Backstop 

Commitment Letters. To the extent that any discrepancies exist between the summary described in 

this Motion and the terms of the Equity Backstop Commitment Letters, the Equity Backstop 

Commitment Letters shall govern. Capitalized terms used but not defined herein shall have the 

meanings ascribed to such terms in the Equity Backstop Commitment Letters. 
 13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Commitment 

Letters. 

Normalized Estimated Net Income, divided by (c) the number of fully diluted 

shares of PG&E Corp. that will be outstanding on the Effective Date 

(assuming the Equity Backstop Commitments are fully drawn). 

Equity 

Offerings 

See Equity 

Backstop 

Commitment 

Letters § 1(a). 

Permitted Equity Offering. Subject to an aggregate cap of $14 billion of net 

cash proceeds, PG&E Corp. will be permitted to conduct any primary offering 

of its common stock (including public offerings and private placements) in 

order to finance the Plan, as long as the Implied P/E Multiple for such offering 

equals or exceeds 13.5 (subject to upward adjustment based on changes in the 

Applicable Utility Index Multiple, the “Permitted Equity Offering 

Threshold”). 

Rights Offering. If PG&E Corp. conducts an equity offering with an Implied 

P/E Multiple of at least 12 (subject to downward adjustment based on changes 

in the Applicable Utility Index Multiple, the “Rights Offering Minimum 

Multiple”) but less than the Permitted Equity Offering Threshold, then PG&E 

Corp. must structure such equity offering so that at least 80% of the aggregate 

cash proceeds are raised through a rights offering to holders of shares of 

common stock of PG&E Corp. (the “Rights Offering”). Rights issued to 

PG&E Corp. shareholders in a Rights Offering would have an exercise price 

equal to the per share price implied by the Rights Offering Minimum 

Multiple. If PG&E Corp. conducts a Rights Offering, it would also be 

permitted to raise up to 20% of the aggregate cash proceeds through another 

form of primary equity offering, subject to the approval of a majority of the 

holders of Equity Backstop Commitments as to the identity of the purchaser 

in such other equity offering if it is not a broadly syndicated underwritten 

public offering. 

Equity Backstop Funding. If PG&E Corp. is unable to conduct an equity 

offering with an Implied P/E Multiple at least equal to the Rights Offering 

Minimum Multiple, then PG&E Corp. would be required to draw upon the 

Equity Backstop Commitments. 

Net Operating 

Losses 

See Equity 

Backstop 

Commitment 

Letters § 1. 

Any Permitted Equity Offering or Rights Offering, and the organizational 

documents of reorganized PG&E Corp., may include such terms and 

conditions as are reasonably advisable in order to avoid an “ownership 

change” within the meaning of Section 382 of the Internal Revenue Code and 

the Treasury Regulations promulgated thereunder or to otherwise preserve the 

ability of the Debtors to utilize their net operating loss carryforwards and other 

tax attributes. 

Reduction of 

Commitments 

See Equity 

Backstop 

Commitment 

Letters § 7.

In the event that the Debtors (a) receive binding commitments providing for 

funding from any Additional Capital Sources that satisfy the criteria set forth 

in the Equity Backstop Commitment Letters or (b) actually obtain funding 

from any Additional Capital Sources, the aggregate amount of Equity 

Backstop Commitments will be reduced by the amount of such Additional 

Capital Sources. “Additional Capital Sources” means, generally, (i) the 

principal amount of debt that is issued by PG&E Corp. in excess of $7 billion 

in connection with the Plan; (ii) the aggregate liquidation preference of 

preferred stock distributed to holders of wildfire claims pursuant to the Plan; 

(iii) the principal amount of any Wildfire Victim Recovery Bonds; (iv) the 
 14

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

proceeds of any preferred stock issued by the Utility; (v) the proceeds of any 

third-party transactions based upon the monetization of any net operating loss 

carryforwards or other tax attributes; and (vi) the principal amount of any 

other debt that is issued or reinstated by the Utility in excess of $27.35 billion 

in connection with the Plan. During the terms of the Equity Backstop 

Commitment Letters, PG&E Corp. may not issue any senior equity securities 

(other than the preferred stock referenced in clause (ii) above). 

Commitment 

Premiums and 

Expense 

Reimbursement 

See Equity 

Backstop 

Commitment 

Letters §§ 2(c), 

6; Exhibit A to 

Equity Backstop 

Commitment 

Letters. 

The initial Commitment Premium for the Equity Backstop Commitments is 

0.75% of the amount of the Equity Backstop Commitments. The initial term 

of the Equity Backstop Commitment Letters expires on January 20, 2020. The 

Debtors have the option to extend the term of the Equity Backstop 

Commitment Letters (a) to April 30, 2020 for an additional Commitment 

Premium of 1.25% of the amount of the Equity Backstop Commitments, (b) 

to June 30, 2020 for an additional Commitment Premium of 2.50% of the 

amount of the Equity Backstop Commitments, and (c) to August 29, 2020 for 

an additional Commitment Premium of 0.50% of the amount of the Equity 

Backstop Commitments. All such Commitment Premiums are cumulative. If 

the Debtors terminate the Equity Backstop Commitment Letters in connection 

with certain proposals to acquire at least 50% of the outstanding shares of 

PG&E Corp. common stock, the Commitment Premiums are paid in cash. 

Additionally, in the event that a plan of reorganization other than the Debtors’ 

Plan is confirmed, then the Commitment Premiums shall be paid in cash if 

elected by the applicable Equity Backstop Party. Except as described in the 

immediately preceding sentences, all Commitment Premiums are payable in 

shares of New PG&E Corp. Common Stock, and the number of such shares 

to be paid as Commitment Premiums will be calculated using the Equity 

Backstop Price described above. 

Additionally, the Debtors agreed to reimburse on a regular basis the Equity 

Backstop Parties for the reasonable fees and expenses of Jones Day and a 

financial advisor incurred prior to the termination of the Equity Backstop 

Commitment Letters, subject to overall caps on reimbursement of $17 million 

in the case of Jones Day and $19 million in the case of the financial advisor. 

Conditions to 

the Obligations 

of the Equity 

Backstop 

Parties 

See Equity 

Backstop 

Commitment 

Letters § 4.

The Equity Backstop Parties’ funding obligations under the Equity Backstop 

Commitment Letters are subject to the satisfaction or waiver of specified 

conditions, including (i) approval of the Equity Backstop Commitment 

Letters by the Court; (ii) satisfaction or waiver of all conditions precedent to 

the Effective Date set forth in the Plan; (iii) entry by the Court of an order (the 

“Confirmation Order”) confirming the Plan, with such amendments, 

modifications, changes and consents to the Plan as approved by parties 

holding a majority of the Equity Backstop Commitments (such approval not 

to be unreasonably withheld, conditioned or delayed), which Confirmation 

Order shall be unstayed and in full force and effect; (iv) the weighted average 

earning rate base of the Debtors for estimated 2021 being no less than 95% of 

$48 billion (i.e., $45.6 billion); and (v) absence of a Material Adverse Effect.
 15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Termination 

Events 

See Equity 

Backstop 

Commitment 

Letters §§ 5–6. 

Equity Backstop Parties. The Equity Backstop Parties may terminate the 

Equity Backstop Commitment Letters if, among other things: (i) the Court has 

not entered an order approving the Equity Backstop Commitment Letters on 

or before November 20, 2019; (ii) the Plan is amended, modified or changed 

without the consent of entities holding a majority of the Equity Backstop 

Commitments (not to be unreasonably withheld, conditioned or delayed), or 

any plan supplement or other plan document is filed or finalized without the 

consent of entities holding a majority of the Equity Backstop Commitments 

(not to be unreasonably withheld, conditioned or delayed); (iii) the 

Confirmation Order has not been entered by the Court on or before June 30, 

2020; (iv) the Effective Date has not occurred on or before 60 days after entry 

of the Confirmation Order; (v) the Debtors have failed to perform any of their 

obligations in the Equity Backstop Commitment Letters, which failure to 

perform would give rise to the failure of certain conditions precedent; (vi) 

wildfires occur in the Utility’s service area in 2019 that damage or destroy in 

excess of 500 dwellings or commercial structures (“Structures”) in the 

aggregate that are asserted to arise out of the Debtors’ activities; (vii) wildfires 

occur in the Utility’s service area in 2020 that damage or destroy in excess of 

500 Structures in the aggregate at a time when the portion of the Utility’s 

system at the location of such wildfire was not successfully de-energized; 

(viii) the Debtors’ aggregate liability with respect to prepetition wildfirerelated claims is determined to exceed $18.9 billion (without counting 

wildfire-related claims that are approved by the CPUC for recovery or passthrough against such cap), subject to upward adjustment for reasonable 

professional fees (the “Wildfire Claims Cap”); (ix) the CPUC fails to issue 

all necessary approvals prior to June 30, 2020; (x) there is in effect an order 

or law permanently prohibiting the consummation of the Plan; (xi) if at any 

time after the first day of the confirmation hearing, asserted administrative 

expense claims in the Chapter 11 Cases (subject to certain ordinary course 

exceptions) exceed $250 million; or (xii) the Utility does not participate in the 

Go-Forward Wildfire Fund. 

PG&E Corp. Among other circumstances, PG&E Corp. may terminate an 

Equity Backstop Commitment Letter in the event (i) the applicable Equity 

Backstop Party repudiates, invalidly purports to terminate or fails to fund its 

Equity Backstop Commitment when required; or (ii) of certain proposals to 

acquire at least 50% of the outstanding shares of PG&E Corp. common stock. 

PG&E Corp. may also elect not to extend the Equity Backstop Commitments, 

as described further above. 

Plan Support 

See Equity 

Backstop 

Commitment 

Letters §§ 14, 

18.

Until the termination of the Equity Backstop Commitment Letters, subject to 

certain limitations, the Equity Backstop Parties must (i) use all reasonable 

efforts to support the Plan with respect to the treatment of their PG&E Corp. 

common shares and to act in good faith with respect to any permitted equity 

offering, (ii) vote all of their PG&E Corp. common shares and claims to accept 

the Plan, and (iii) vote their PG&E Corp. common shares and claims to reject 

any plan of reorganization other than the Plan. If the Debtors provide another 

creditor holding a funded debt claim a more favorable treatment than provided 

to a Equity Backstop Party with a similar funded debt claim, the Debtors shall 
 16

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

take all actions so that the more favorable treatment applies to such Equity 

Backstop Party’s similar funded debt claim. 

Nothing in the Equity Backstop Commitment Letters prohibits any party from 

appearing as a party-in-interest in the Chapter 11 Cases, so long as such 

appearance and the positions advocated are consistent with the Equity 

Backstop Commitment Letters and the Plan, and are not for the purpose of, 

and could not reasonably be expected to have the effect of, hindering, delaying 

or preventing the consummation of the transactions contemplated by the Plan.

Subrogation 

Settlement 

See Equity 

Backstop 

Commitment 

Letters § 15(b); 

Exhibit A to 

Equity Backstop 

Commitment 

Letters. 

If the Court does not approve the Subrogation RSA on or prior to October 31, 

2019, then (i) the Wildfire Claims Cap under the Equity Backstop 

Commitment Letters shall be reduced to $17.9 billion (without counting 

wildfire-related claims that are approved by the CPUC for recovery or passthrough against such cap), subject to upward adjustment for reasonable 

professional fees, and (ii) the Debtors have agreed to amend the Plan to 

remove the Subrogation Settlement. 

Certain key terms and provisions of the Debt Financing Commitment Letters are 

summarized as follows (subject, in the case of the Bridge Facilities, to the “market flex” terms 

contained in the Bridge Fee Letters):15

Bridge Commitment Letters 

 PG&E Corp. Bridge Facility Utility Bridge Facility 

Borrower PG&E Corp. Utility 

Facility Up to $7,000 million 364-day 

senior unsecured bridge term 

loan credit facility 

Up to $27,350 million 364-day 

senior secured bridge term loan 

credit facility 

15 This summary is qualified in its entirety by reference to the provisions of the Debt Financing 

Commitment Letters. To the extent that any discrepancies exist between the summary described in 

this Motion and the terms of the Debt Financing Commitment Letters, the Debt Financing 

Commitment Letters shall govern. Capitalized terms used but not defined herein shall have the 

meanings ascribed to such terms in the Debt Financing Commitment Letters. 
 17

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Roles 

See Bridge Commitment 

Letters, § 1.

JPMorgan will act as administrative agent and, solely for the Utility 

Bridge Facility, as collateral agent. JPMorgan, BofA, Barclays, Citi 

and GS Bank will act as joint bookrunners and joint lead arrangers. 

Interest Rate 

See Bridge Commitment 

Letters, Annex A-I.

At the option of PG&E Corp. or the Utility, as applicable, (a) the 

Adjusted LIBO Rate plus the Applicable Margin set forth below or 

(b) ABR plus the Applicable Margin set forth below minus 1.00% 

(but not less than 0.00%). 

Applicable Margin: 1.75% - 

3.00% 

Public debt 

rating 

Rate 

BB+ / Ba1 1.75% 

BB / Ba2 2.00% 

BB- / Ba3 2.125% 

B+ / B1 

or worse 

2.25% 

Each of the foregoing increases 

by 0.25% each 90 day period 

after the Closing Date. 

Applicable Margin: 1.125% - 

2.50% 

Public debt 

rating 

Rate 

BBB+ / Baa1 1.125% 

BBB / Baa2 1.375% 

BBB- / Baa3 1.50% 

BB+ / Ba1 

or worse 

1.75% 

Each of the foregoing increases 

by 0.25% each 90 day period 

after the Closing Date. 

Security 

See Bridge Commitment 

Letters, Annex A.

Unsecured Secured by a first-priority 

security interest in substantially 

all Utility assets (subject to 

permitted liens and other 

customary exceptions and 

limitations on perfection steps 

and thresholds to be agreed). 

Bridge Facility Fees and 

“Alternate Transaction” 

See Bridge Commitment 

Letters, Annex A-1; Bridge 

Fee Letters.

Ticking Fees. 0.30% per annum 

times the actual daily undrawn 

commitments accruing during 

the period commencing 90 days 

after the date of the PG&E Corp. 

Bridge Commitment Letter and 

ending on and including the 

earlier of (x) the Closing Date 

and (y) the date of termination of 

the commitments, for the 

account of each lender, payable 

Ticking Fees. 0.175% per 

annum times the actual daily 

undrawn commitments accruing 

during the period commencing 

90 days after the date of the 

Utility Bridge Commitment 

Letter and ending on and 

including the earlier of (x) the 

Closing Date and (y) the date of 

termination of the 

commitments, for the account of 
 18

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

quarterly in arrears and on 

certain other specified dates. 

Duration Fees. For the ratable 

benefit of the lenders, in an 

amount equal to (i) 0.50% of the 

aggregate principal amount of 

the loans outstanding on the 

90th day after the Closing Date; 

(ii) 0.75% of the aggregate 

principal amount of the loans 

outstanding on the 180th day 

after the Closing Date; and (iii) 

1.00% of the aggregate principal 

amount of the loans outstanding 

on the 270th day after the 

Closing Date. 

Other Fees / “Alternate 

Transaction”. Set forth in the 

Bridge Fee Letter, unredacted 

copies of which are to be 

provided under seal to the Court, 

the Office of the United States 

Trustee and advisors to the 

Official Committee of 

Unsecured Creditors and 

Official Committee of Tort 

Claimants on a confidential and 

professionals’ eyes only basis. 

each lender, payable quarterly in 

arrears and on certain other 

specified dates. 

Duration Fees. For the ratable 

benefit of the lenders, in an 

amount equal to (i) 0.50% of the 

aggregate principal amount of 

the loans outstanding on the 

90th day after the Closing Date; 

(ii) 0.75% of the aggregate 

principal amount of the loans 

outstanding on the 180th day 

after the Closing Date; and (iii) 

1.00% of the aggregate principal 

amount of the loans outstanding 

on the 270th day after the 

Closing Date. 

Other Fees / “Alternate 

Transaction”. Set forth in the 

Bridge Fee Letter, unredacted 

copies of which are to be 

provided under seal to the Court, 

the Office of the United States 

Trustee and advisors to the 

Official Committee of 

Unsecured Creditors and 

Official Committee of Tort 

Claimants on a confidential and 

professionals’ eyes only basis. 

Mandatory Prepayments 

and Commitment 

Reductions

See Bridge Commitment 

Letters, Annex A. 

The aggregate commitments in respect of the applicable Bridge 

Facility shall be automatically and permanently reduced, and after 

the Closing Date, the aggregate principal amount of loans under the 

applicable Bridge Facility shall be prepaid, in each case without 

penalty or premium and on a dollar-for-dollar basis, by: 

a) 100% of the Net Cash Proceeds of all non-ordinary course asset 

sales or dispositions or any insurance or condemnation 

proceeds (subject to certain exceptions set forth in the Bridge 

Commitment Letters); 

b) 100% of the Net Cash Proceeds received from (i) incurrences 

of debt securities or other debt (including pursuant to any bank 

or other credit facility and any securitization) (other than 

Excluded Debt and amounts referred to in clause (c) below) and 

(ii) issuances of equity securities (including shares of common 

stock or preferred equity or equity-linked securities) (other than 

Excluded Equity Offerings); and 

c) 100% of the committed amount under Qualifying Bank 

Financings (subject to certain exceptions); 
 19

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

provided, however, that until such time as the Equity Backstop 

Commitments have been reduced to $0, except as provided in the 

Bridge Commitment Letters, the Bridge Commitments are not 

reduced by any cash proceeds from any Additional Capital Source 

(as defined in the Equity Backstop Commitment Letters) to the 

extent that such cash proceeds also reduce the Equity Backstop 

Commitments. 

The obligations of the Bridge Commitment Parties to fund on the 

Closing Date shall be automatically and permanently reduced, 

without penalty or premium and on a dollar-for-dollar basis, by the 

aggregate principal amount of any roll-over, “take-back” or 

reinstated debt of PG&E Corp. or the Utility, as applicable. 

Syndication

See Bridge Commitment 

Letters, § 3.

PG&E Corp. and the Utility have agreed that, until the earlier of (x) 

the achievement of a Successful Syndication (as defined in the 

applicable Bridge Fee Letter) and (y) 60 days following the Closing 

Date of the applicable Bridge Facility, PG&E Corp. and the Utility 

(i) will not, without the prior written consent of the Arrangers, 

syndicate or issue, attempt to syndicate or issue or announce the 

syndication or issuance of any competing debt facility or any debt 

or equity security (other than common equity) that would 

reasonably be expected to materially impair the primary syndication 

of the Bridge Facilities (subject to certain exceptions set forth in the 

Bridge Commitment Letters), and (ii) will actively assist the 

Arrangers in achieving a mutually satisfactory syndication. 

Expense 

Reimbursement 

See Bridge Commitment 

Letters, § 5.

The Bridge Commitment Parties and their respective affiliates will 

be reimbursed for out-of-pocket expenses incurred in connection 

with the Bridge Facilities and any related documentation or the 

administration, amendment, modification or waiver thereof. 

Indemnification 

See Bridge Commitment 

Letters, § 5.

Subject to certain exceptions set forth in the Bridge Commitment 

Letters, the Bridge Commitment Parties and their related parties 

will be indemnified from any losses, claims, damages, liabilities 

and related expenses to which any such indemnified person may 

become subject arising out of or in connection with the Bridge 

Commitment Letters, the Bridge Facilities, the use of the proceeds 

thereof or any related transaction or any Proceeding, and will be 

reimbursed for reasonable, documented and invoiced out-of-pocket 

legal expenses (subject to the Counsel Limitation) or other 

reasonable, documented and invoiced out-of-pocket expenses 

incurred in connection with investigation or defense. 

Conditions Precedent 

See Bridge Commitment 

Letters, Annex B.

The obligations of the lenders to lend under the Bridge Facilities are 

subject to satisfaction or waiver of certain condition precedents (or 

the absence of certain termination rights) substantially similar to 

those described above with respect to the Equity Backstop 
 20

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Commitment Letters and certain other conditions, including: 

(i) entry by the Court of (a) the Approval Order (as defined below) 

and (b) a confirmation order confirming the Plan in form and 

substance reasonably satisfactory to the Required Commitment 

Parties by no later than June 30, 2020, with each order in full force 

and effect, final and non-appealable and not subject to a stay; 

(ii) none of the Plan, the Confirmation Order or the Approval Order 

shall have been amended or modified or any condition therein 

waived without the consent of the Required Commitment Parties 

(not to be unreasonably withheld, conditioned or delayed); 

(iii) compliance in all material respects with the Confirmation 

Order; (iv) all documents necessary to implement the Plan and the 

financings and distributions contemplated thereunder shall have 

been executed (each, if adverse to the interests of the Bridge 

Commitment Parties, in form and substance reasonably acceptable 

to the Required Commitment Parties); (v) delivery of specified 

historical and pro forma financial information; (vi) accuracy of 

representations and warranties and lack of default or event of 

default; (vii) execution of definitive documentation for the Bridge 

Facilities; (viii) delivery of customary legal opinions, corporate 

organizational documents and solvency certificates and payment of 

all fees; (ix) delivery of documents and information under 

applicable “know your customer” and anti-money laundering rules; 

(x) solely with respect to the Utility Bridge Facility, execution and 

delivery of all documents and instruments required to perfect the 

security interests in the Collateral and completion of flood 

insurance due diligence; (xi) receipt by the Utility of investment 

grade senior secured debt ratings with a stable or better outlook; 

(xii) absence of a Material Adverse Effect since June 30, 2019; 

(xiii) receipt by PG&E Corp. of at least $14,000 million of proceeds 

from the issuance of equity; and (xiv) ownership by PG&E Corp. 

of 100% of the Utility common stock. 

Termination Rights 

See Bridge Commitment 

Letters, § 11.

The Bridge Commitment Parties’ commitments and agreements 

with respect to the Bridge Facilities are subject to termination 

rights, including (i) certain termination rights that are substantially 

similar to termination rights described above with respect to the 

Equity Backstop Commitment Letters or conditions precedent 

described above with respect to the Equity Backstop Commitment 

Letters or the Bridge Commitment Letters, (ii) the occurrence of the 

Effective Date without using the applicable Bridge Facility; (iii) the 

dismissal or conversion of the Chapter 11 Cases or the appointment 

of a trustee or examiner with enlarged powers; and (iv) if the Court 

shall not have entered an order approving the Debt Financing 

Commitment Letters (the “Approval Order”), in form and 

substance reasonably satisfactory to the Bridge Commitment 

Parties, on or before November 20, 2019. 

Bank Financing Engagement Letter 
 21

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Bank Engagement 

See Bank Financing 

Engagement Letter, § 1.

JPMorgan, BofA, Barclays, Citi and GS Bank (or their designated 

affiliates) are engaged to act as joint lead arrangers and joint 

bookrunners for (a) a $500 million PG&E Corp. revolving credit 

facility, (b) a $3,500 million Utility revolving credit facility, (c) a 

senior secured PG&E Corp. term loan facility and (d) any other 

bank loan or credit facility (other than a securitization facility) 

(clauses (a)-(d), collectively, the “Bank Financing”), in each case 

in connection with the financing of the transactions and 

distributions contemplated by the Plan, the refinancing or 

replacement of the Bridge Facilities or other interim debt financing 

for the transactions and distributions contemplated by the Plan, or 

any permanent revolving or term credit facility or other financing 

entered into in connection with the Plan (collectively, the “Exit 

Financing”). 

Cooperation 

See Bank Financing 

Engagement Letter, § 2. 

PG&E Corp. and the Utility have agreed to actively assist the 

Arrangers in achieving a mutually satisfactory syndication of any 

syndicated Bank Financing. 

Termination 

See Bank Financing 

Engagement Letter, § 3.

The engagement may be terminated by any Arranger (as to itself) at 

any time on written notice. PG&E Corp. and the Utility may 

terminate the engagement on the earliest of (a) twelve months after 

the date of the Bank Financing Engagement Letter, if the Effective 

Date has not occurred, (b) the Effective Date, if the Bridge Facilities 

or other interim exit financing were not used and if any Bank 

Financing consummated prior to or concurrently with the Effective 

Date complied with the Bank Financing Engagement Letter, (c) the 

first anniversary of the Effective Date and (d) the date of receipt by 

PG&E Corp. and the Utility of aggregate cash proceeds equal to 

outstanding obligations under the Bridge Facilities or any other 

interim Exit Financing from the incurrence of Bank Financing in a 

transaction in which each Arranger acts in its titled capacity and 

receives its Requisite Economics (as defined below), if the Bank 

Financing is consummated after the Effective Date. 

Indemnification / 

Expense Reimbursement 

See Bank Financing 

Engagement Letter, § 4.

Set forth in the Bank Financing Engagement Letter. 

Alternate Financing 

See Bank Financing 

Engagement Letter, § 5(b).

If during the period commencing on the date of the Bank Financing 

Engagement Letter and ending 12 months following its termination, 

PG&E Corp., the Utility or any of their respective affiliates obtain 

Exit Financing or any other exit financing in connection with a plan 

of reorganization other than the Plan (any such financing, an 

“Alternate Financing”) without an Arranger acting in its titled 

capacity in connection therewith and without receiving at least the 

percentage of minimum economics of such financing under the 
 22

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Bank Financing Engagement Letter (the “Requisite Economics”), 

then PG&E Corp. and the Utility have agreed to pay to such 

Arranger an amount equal to 50% (or, if such Alternate Financing 

refinances or replaces any outstanding Bridge Facility, 100%) of 

the fees that would have been payable to such Arranger if such 

Arranger acted in its titled capacity with the Requisite Economics 

for such Alternate Financing; provided that no fee is payable to any 

Arranger that has been offered the opportunity to act in a titled 

capacity with the Requisite Economics and has elected not to do so 

(unless in connection with an Alternate Financing in connection 

with a plan other than the Plan). 

Minimum 

Economics/Fees 

Set forth in the Bank Financing Engagement Letter, unredacted 

copies of which are to be provided to the Court, the Office of the 

United States Trustee and advisors to the Official Committee of 

Unsecured Creditors and Official Committee of Tort Claimants on 

a confidential and professionals’ eyes only basis. 

Securities Engagement Letter 

Securities Engagement 

See Securities Engagement 

Letter, § 1.

J.P. Morgan Securities LLC, BofA, Barclays Capital Inc., Citi and 

Goldman Sachs & Co. LLC (or their designated affiliates) 

(collectively, the “Securities Engagement Parties”) are engaged 

to act as joint bookrunning managers and joint lead underwriters, 

joint lead placement agents or joint lead initial purchasers, as 

applicable, in respect of any offering (each, an “Offering”) by 

PG&E Corp., the Utility or any of their respective affiliates of debt 

securities (other than (x) any convertible debt, (y) any commercial 

paper programs and (z) any securitization) (the “Securities”), 

whether completed prior to, on or after the Effective Date, including 

the contemplated issuance of (a) at least $7,000 million aggregate 

principal amount of PG&E Corp. senior notes and (b) at least 

$27,350 million aggregate principal amount of Utility senior notes 

(clause (a) and (b) collectively, the “Proposed Financing”), in each 

case in connection with the financing of the transactions and 

distributions contemplated by the Plan, and the refinancing or 

replacement of the Bridge Facilities or other interim debt financing 

for the transactions and distributions contemplated by the Plan 

(collectively, the “Exit Financing”). 

Matters Relating to 

Securities Engagement 

See Securities Engagement 

Letter, § 2.

PG&E Corp. and the Utility will not initiate, solicit or enter into any 

discussions or negotiations for the issuance, offering or sale of 

Securities to any third parties, except through the Securities 

Engagement Parties. If PG&E Corp. or the Utility receive any 

inquiry concerning the Securities, PG&E Corp. and the Utility will 

promptly inform the Securities Engagement Parties. In addition, 

PG&E Corp. and the Utility have agreed that, during the term of the 

Securities Engagement Letter, they will not offer, sell, contract to 

sell or otherwise dispose of any securities substantially similar to 
 23

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Securities without the prior written consent of the Securities 

Engagement Parties. 

PG&E Corp. and the Utility shall not (except through the Securities 

Engagement Parties or as otherwise consented to by the Securities 

Engagement Parties) sell or offer to sell any Securities (or any 

substantially similar securities) during the term of the Securities 

Engagement Letter, and shall not offer or sell any security that 

would be integrated with the sale of any Securities that are not being 

offered or sold in a registered Offering in a manner that would 

require such Securities to be registered under the Act. 

Termination 

See Securities Engagement 

Letter, § 3.

The engagement may be terminated by any Securities Engagement 

Party (as to itself) on written notice. PG&E Corp. and the Utility 

may terminate the engagement on the earliest of (a) twelve months 

after the date of the Securities Engagement Letter, if the Effective 

Date has not occurred, (b) the Effective Date, if the Bridge Facilities 

or other interim exit financing were not used and if any Offering 

consummated prior to or concurrently with the Effective Date 

complied with the Securities Engagement Letter, (c) the first 

anniversary of the Effective Date and (d) the date of receipt by 

PG&E Corp. and the Utility of aggregate cash proceeds equal to 

outstanding obligations under the Bridge Facilities or any other 

interim Exit Financing from the sale of Securities in a transaction 

in which each Securities Engagement Party acts in a titled capacity 

and receives its Requisite Economics, if such transaction is 

consummated after the Effective Date. Additionally, PG&E Corp. 

and the Utility may terminate the Securities Engagement Letter “for 

cause” with respect to any Rule 5110 Offering. 

Indemnification / 

Expense Reimbursement 

See Securities Engagement 

Letter, § 4 and Annex A.

Set forth in the Securities Engagement Letter. 

Alternate Financing 

See Securities Engagement 

Letter, § 5(c).

If during the period commencing on the date of the Securities 

Engagement Letter and ending 12 months following its termination, 

PG&E Corp., the Utility or any of their respective affiliates obtain 

Exit Financing or any other exit financing in connection with a plan 

of reorganization other than the Plan (other than bank or syndicated 

credit financing) (any such financing, an “Alternate Financing”) 

without a Securities Engagement Party acting in its titled capacity 

under the Securities Engagement Letter in connection therewith and 

without receiving at least the percentage of minimum economics of 

such financing under the Securities Engagement Letter (the 

“Requisite Economics”), then PG&E Corp. and the Utility have 

agreed to pay to such Securities Engagement Party an amount equal 

to 50% (or, if such Alternate Financing refinances or replaces any 

outstanding Bridge Facility, 100%) of the fees that would have been 

payable to such Securities Engagement Party if such Securities 
 24

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Engagement Party acted in its titled capacity with the Requisite 

Economics for such Alternate Financing; provided that no fee is 

payable to any Securities Engagement Party that has been offered 

the opportunity to act in a titled capacity with the Requisite 

Economics and has elected not to do so (unless in connection with 

an Alternate Financing in connection with a plan other than the 

Plan). 

Disclosure 

See Securities Engagement 

Letter, § 6.

PG&E Corp. and the Utility shall furnish the Securities Engagement 

Parties with all financial and other information concerning the 

Debtors, the Plan, the financing thereof and related matters that the 

Securities Engagement Parties may reasonably request for inclusion 

in any Offering Document or otherwise. 

Minimum 

Economics/Fees 

Set forth in the Securities Engagement Letter, unredacted copies of 

which are to be provided to the Court, the Office of the United 

States Trustee and advisors to the Official Committee of Unsecured 

Creditors and Official Committee of Tort Claimants on a 

confidential and professionals’ eyes only basis. 

Certain additional provisions of the Proposed Orders are summarized as follows:16 

Nature of Exit Financing 

Obligations 

See Proposed Orders, ¶ 4.

The Exit Financing Obligations shall be treated as allowed 

administrative expenses of the Debtors whether or not the Exit 

Financing Commitments are funded, and none of such amounts 

shall be discharged, modified, or otherwise affected by any chapter 

11 plan of any of the Debtors, subject to and in accordance with the 

Exit Financing Commitment Letters. 

Amendments 

See Proposed Orders, ¶ 7.

The Proposed Orders provide that the Debtors and the Exit 

Commitment Parties may enter into any nonmaterial amendment, 

modification or supplement of any provision of the Exit Financing 

Commitment Letters without further notice, hearing or order of the 

Court. In the case of any material amendment, modification or 

supplement to the Exit Financing Commitment Letters that is 

adverse to the Debtors (a “Material Amendment”), the Debtors 

shall provide notice to the Notice Parties (as defined below), each 

of whom shall have five (5) calendar days from the date of receipt 

of such notice to object in writing to the Debtors and the applicable 

Exit Commitment Parties to such Material Amendment. If no 

objections are timely received (or if the Notice Parties indicate via 

electronic mail that they have no objection) to a Material 

16 This summary is qualified in its entirety by reference to the Proposed Orders. To the extent 

that any discrepancies exist between the summary described in this Motion and the Proposed Orders, 

the Proposed Orders shall govern. 
 25

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Amendment, the Debtors are authorized to execute such Material 

Amendment. If a Notice Party timely objects and such objection is 

not resolved prior to the date upon which such objection is 

scheduled to be heard by the Court, approval of the Court (which 

may be sought on an expedited basis) will be necessary to execute 

a Material Amendment. 

This provision is similar to paragraph 26 of that certain Final Order 

Pursuant to 11 U.S.C. §§ 105, 362, 363, 364, 503 and 507 and Fed. 

R. Bankr. P. 2002, 4001, 6004 and 9014 (i) Authorizing Debtors to 

Obtain Senior Secured, Superpriority, Postpetition Financing, (ii) 

Granting Liens and Superpriority Claims, (iii) Modifying the 

Automatic Stay, and (iv) Granting Related Relief [Docket No. 

1091]. 

No Imposition of 

Liability 

See Proposed Orders, ¶ 8.

Nothing in the Proposed Orders, the Exit Financing Commitment 

Letters or any other documents related to the transactions 

contemplated thereby shall in any way be construed or interpreted 

to impose or allow the imposition upon any Exit Commitment Party 

of any liability for any claims arising from the post-petition 

activities of the Debtors in the operation of their businesses, or in 

connection with their restructuring efforts. 

Automatic Stay 

See Proposed Orders, ¶ 13.

The Proposed Orders provide for the modification of the automatic 

stay under section 362 of the Bankruptcy Code to the extent 

necessary to enable the Exit Commitment Parties to perform under 

the Exit Financing Commitment Letters and to exercise any and all 

of their contractual rights thereunder. 

IV. BASIS FOR RELIEF REQUESTED 

A. Entry into the Exit Financing Commitment Letters is a Sound Exercise of the 

Debtors’ Business Judgment and is in the Best Interests of Their Estates. 

Section 363(b)(1) of the Bankruptcy Code provides that a debtor in possession, “after 

notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of 

the estate”. 11 U.S.C. § 363(b)(1). “Such use, sale or lease must be based upon a debtor’s sound 

business judgment. The business judgment rule ‘is a presumption that in making a business decision 

the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the 

action was in the best interests of the company.’” In re Station Casinos, Inc., No. BK-09-52477 
 26

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(GWZ), 2010 Bankr. LEXIS 5447, at *7 (Bankr. D. Nev. Feb. 2, 2010) (quoting In re Integrated 

Resources, Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992)). 

Courts emphasize that the business judgment rule is not an onerous standard and may 

be satisfied “as long as the proposed action appears to enhance the debtor’s estate”. Crystalin, L.L.C. 

v. Selma Props. Inc. (In re Crystalin, L.L.C.), 293 B.R. 455, 464 (B.A.P. 8th Cir. 2003) (emphasis in 

original, alterations and internal quotation marks omitted) (quoting Four B. Corp. v. Food Barn Stores, 

Inc. (In re Food Barn Stores, Inc.), 107 F.3d 558, 566 n.16 (8th Cir. 1997)); see also In re 

AbitibiBowater Inc., 418 B.R. 815, 831 (Bankr. D. Del. 2009) (stating the business judgment standard 

is “not a difficult standard to satisfy”). Once a debtor articulates a valid business justification, a 

presumption arises that the debtor’s decision was made on an informed basis, in good faith and with 

the belief that the decision was in the best interests of the debtor’s estate. In re Integrated Resources, 

Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992) (quoting Smith v. Van Gorkom, 488 A.2d 858, 872 

(Del. 1985)). 

Section 105(a) of the Bankruptcy Code further supports entry of an order approving 

the Exit Financing Commitment Letters by providing that “[t]he court may issue any order, process, 

or judgment that is necessary or appropriate to carry out the provisions of [title 11].” 11 U.S.C. § 

105(a); see also In re Excel Innovations, Inc., 502 F.3d 1086, 1093 (9th Cir. 2007); In re Robles, No. 

14-51812 (ASW), 2014 WL 3715092, at *1 (Bankr. N.D. Cal. July 24, 2014). Together, sections 

363(b) and 105(a) of the Bankruptcy Code give the Court sufficient authority to grant the relief 

requested herein. See In re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (D. Del. 1999) 

(stating courts should permit use of assets outside the ordinary course of business if “sound business 

purpose justifies such actions”); Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re 

Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) (“Where the debtor articulates a 

reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), 

courts will generally not entertain objections to the debtor’s conduct.”). 

Courts have routinely relied on such sections of the Bankruptcy Code when approving 

the relief sought herein. See, e.g., In re Hexion Holdings LLC, No. 19-10684 (KG), at 4 (Bankr. D. 
 27

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Del. May 15, 2019) (ECF No. 367) (“The Equity Backstop Agreement and the terms and provisions 

included therein are approved in their entirety pursuant to sections 105 and 363 of the Bankruptcy 

Code.”); In re Hexion Holdings LLC, No. 19-10684 (KG), at 4 (Bankr. D. Del. May 15, 2019) (ECF 

No. 368) (“The Debt Backstop Agreement and the terms and provisions included therein are approved 

in their entirety pursuant to sections 105 and 363 of the Bankruptcy Code.”). 

As in other cases where exit financing commitment agreements have been approved, 

the Debtors’ decision to enter into the Exit Financing Commitment Letters was a valid exercise of 

their business judgment. The equity financings backstopped by the Equity Backstop Commitment 

Letters are an important component of the Debtors’ successful emergence from chapter 11, since they 

will allow the Debtors to fund payments to wildfire victims contemplated by the Plan and required by 

AB 1054. Given the possibility that the price of PG&E Corp. shares may decrease or that market 

conditions could deteriorate between now and confirmation of the Plan, it is important to the Debtors 

to lock in a reasonable baseline share price that can be improved if the Debtors’ market value and 

market conditions permit. (See Ziman Decl. ¶ 14.) 

Similarly, the Bridge Commitment Letters backstop the Debtors’ incurrence of new 

long-term debt to refinance pre-petition high-coupon debt, which, in the case of the Utility bonds, 

could save the Debtors over $170 million per year in interest expense (or nearly $1.5 billion (on a net 

present value basis) in the aggregate). (Id. ¶ 20.) As with the Equity Backstop Commitment Letters, 

the Debt Financing Commitment Letters provide assurances that sufficient funds will be available on 

the Effective Date in the event that market financings cannot be consummated. 

Though the Exit Commitment Parties agreed to provide the Exit Financing 

Commitments in Fall 2019, there are no assurances that they (or anybody else) would be willing to do 

so on similar terms on the Effective Date, anticipated to occur in more than eight months. 

Recognizing, however, that the Debtors may be able to consummate financings on more attractive 

terms than those contemplated by the Exit Financing Commitment Letters as they near emergence, the 

Debtors negotiated for flexibility around structure and timing of exit financings. This flexibility allows 
 28

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Debtors to pursue exit financings that maximize the value of their estates for the benefit of all 

stakeholders. 

Moreover, the Exit Financing Commitment Letters align the incentives of the Debtors 

with those of leading financial institutions toward the ultimate success of the Debtors’ Plan. (Id. ¶ 28.) 

These financial institutions have committed significant capital (and incurred reputational risk) to 

ensure the viability of the Debtors’ Plan and therefore have an interest in seeing it through to 

completion. (Id.) These commitments also enhance the confidence of claimants, financial creditors, 

equityholders, ratepayers and other stakeholders that the Debtors will be able to fund the contemplated 

payments on the Effective Date and emerge from chapter 11 as a financially sound utility. (Id.) 

For all the above reasons, the Debtors have concluded that the Exit Financing 

Commitment Letters are best designed to maximize the value of their estates and the likelihood of 

their successful emergence from the Chapter 11 Cases in accordance with the terms of the Plan. 

Accordingly, the Motion should be approved. 

B. Payment and Allowance of the Exit Financing Obligations as Administrative 

Expense Claims Should Be Approved Because They are Reasonable, MarketBased and Essential Terms of the Exit Financing Commitment Letters. 

The Exit Financing Obligations are essential components of the Exit Financing 

Commitment Letters. Such fees and/or premiums, indemnities, costs and expenses are necessary and 

reasonable compensation for the substantial undertakings of the Exit Commitment Parties, and are 

favorable for the Debtors when compared to fees in cases of similar size and complexity. (See

Ziman Decl. ¶¶ 18, 27.) Absent the Debtors’ agreement to pay the Exit Financing Obligations, the 

Exit Commitment Parties would not have been willing to provide the Exit Financing Commitments. 

(Id. ¶ 17.) Without the Exit Financing Commitments, the Debtors have no assurances that they will 

have access to the financing proceeds required to fund the payments contemplated by the Plan, 

including the satisfaction in full of wildfire claims and pre- and post-petition funded debt obligations. 

(Id. ¶¶ 14, 22.) Therefore, without agreeing to pay the Exit Financing Obligations in accordance with 
 29

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the Exit Financing Commitment Letters, the Debtors would bear risks that are beyond their ability to 

control (and which could ultimately jeopardize their timely emergence). 

For these reasons, the Debtors determined, in their business judgment and in 

consultation with their advisors, that their agreements to pay the Exit Financing Obligations were 

essential and fair means to obtain the Exit Financing Commitments. Compared to the substantial value 

provided by the Exit Financing Commitment Letters, and the significant duration of the Exit Financing 

Commitments, the Exit Financing Obligations are a reasonable use of estate resources and should be 

accorded administrative expense priority under section 507(a)(2) of the Bankruptcy Code. The Exit 

Financing Obligations are actual and necessary costs, not only for preserving the Debtors’ estates, but 

also for maximizing their value and enhancing overall stakeholder recoveries. 

The commitment premiums (the “Equity Commitment Premiums”) under the Equity 

Backstop Commitment Letters (0.75%, subject to increase to a maximum of 5.00% as the Equity 

Backstop Commitments continue to be extended and conditionality and termination rights fall away 

or are otherwise resolved) and the Debtors’ agreement to pay reasonable fees and expenses of counsel 

and a financial advisor to the Equity Backstop Parties, subject to caps of $17 million and $19 million, 

respectively, are market-based and comparable to, or less than, those that courts have approved in 

other recent chapter 11 cases. See, e.g., In re Monitronics International, Inc., No. 19-33650 (DRJ) 

(Bankr. S.D. Tex. July 30, 2019) (ECF No. 159) (approving debtors’ assumption of put option 

agreement providing for an 8.0 percent backstop put option premium for a 115 day commitment term 

and expense reimbursement of the backstop parties’ advisors); In re Hexion Holdings LLC, No. 19-

10684 (KG) (Bankr. D. Del. May 15, 2019) (ECF No. 367) (approving backstop premium equal to 8.0 

percent of the rights offering amount for a 126 day term and expense reimbursement of the backstop 

parties’ advisors); In re Pacific Drilling S.A., No. 17-13193 (MEW) (Bankr. S.D.N.Y. Sept. 25, 2018) 

(ECF No. 616) (approving backstop premium equal to 5.3 percent of the aggregate rights offering 

amount for a 66 day term and expense reimbursement of the backstop parties’ advisors). Here, subject 

to the occurrence of the Effective Date, the Equity Commitment Premiums are payable in shares of 

New PG&E Corp. Common Stock, which minimizes the cash outflow on the Effective Date. 
 30

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Moreover, as described above, the Equity Commitment Premiums have been structured 

so that only modest premiums (0.75%, significantly less than any of the transactions identified above) 

are payable upfront for the Equity Backstop Commitments, which initially terminate on January 20, 

2020, but may be extended by the Debtors at three points in the Chapter 11 Cases. The first extension 

date, January 20, 2020, coincides with the Equity Backstop Parties’ termination right if a material 

wildfire occurs in the Debtors’ service territory in 2019, which must be exercised on or before January 

15, 2020. In exercising the first extension option, the Debtors can proceed with certainty that this 

termination right may not thereafter be exercised. On the second extension date, April 30, 2020, the 

Debtors will have greater certainty as to the likely quantum of wildfire claims and outcome of ongoing 

regulatory proceedings. If the related conditions precedent have not been satisfied (or the Debtors 

conclude they are unlikely to be satisfied) as of such date, the Debtors may elect not to further extend 

the Equity Backstop Commitment Letters, while only paying the first two commitment premiums (i.e., 

2.00% in the aggregate). The third extension date, June 30, 2020, coincides with the confirmation 

date required by AB 1054 (and the associated Equity Backstop Commitment Letter termination right 

in favor of the Equity Backstop Parties). The rolling extension feature was specifically designed to 

accommodate the unpredictability of these Chapter 11 Cases—as the termination rights fall away, and 

as uncertainty related to the Equity Backstop Commitment conditions is resolved, the Debtors may 

decide whether to extend the Equity Backstop Commitments (and incur the associated Equity 

Commitment Premiums) or terminate them. However, even if the Equity Backstop Commitments are 

extended through August 29, 2019, the maximum Equity Commitment Premium that would be owing 

is still in line with market, notwithstanding the significant duration of the Equity Backstop 

Commitments. (Ziman Decl. ¶ 18.) 

Like the Equity Commitment Premiums, the fees, expense reimbursements and 

indemnities owing by the Debtors under the Bridge Fee Letters and the Debt Financing Engagement 

Letters are reasonable under the circumstances, are the product of arms’-length negotiations and are 

comparable to, or better than, market. (Ziman Decl. ¶ 27.) The Debtors and their advisors negotiated 

the fees down relative to the initial proposals and developed a mechanism to stage fees over time, 
 31

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

consistent with the milestone dates in the Equity Backstop Commitment Letters, which is atypical for 

bridge facilities. (Id.) This structure allows the Debtors to maximize the value of their estates by 

proceeding with their Plan (which the Debtors believe is in the best interests of all stakeholders), while 

minimizing the fees incurred by the Debtors until closer to the Effective Date (when associated 

conditionality and termination rights have been reduced or eliminated). Moreover, the Bridge 

Facilities are intended to serve only as a backstop for lower-cost “take-out” financing. As and when 

such lower-cost financing is incurred, the Bridge Commitments are reduced dollar-for-dollar. If the 

entire $34.35 billion in Bridge Commitments remain outstanding until June 30, 2020 (i.e., the statutory 

confirmation deadline), the aggregate fees payable by the Debtors with respect to such Bridge 

Commitments would be approximately $210 million.17 Based on analyses conducted by the Debtors’ 

financial advisors, this quantum of commitment fees is comparable to, or less than, those charged in 

other large complex bridge financing transactions over the last five years. (Id.) 

Treatment of the Exit Financing Obligations as administrative expenses of the estate is 

also well within market parameters and is a customary term in exit financing commitment letters. See, 

e.g., In re Hexion Holdings LLC, No. 19-10684 (KG), at 5 (Bankr. D. Del. May 15, 2019) (ECF No. 

367) (“The . . . expenses provided for or permitted by the Equity Backstop Agreement (including . . . 

the Equity Expense Reimbursement . . . ) are hereby approved as reasonable, [and] shall constitute 

allowed administrative expense claims pursuant to section 503(b) of the Bankruptcy Code . . . .”); In 

re Hexion Holdings LLC, No. 19-10684 (KG), at 5 (Bankr. D. Del. May 15, 2019) (ECF No. 368) 

17 In addition to such commitment fees, the Bridge Commitment Letters and Bridge Fee Letters 

provide for the payment of fees if the Bridge Facilities are funded and on certain specified dates 

thereafter depending on the amount of the Bridge Facilities outstanding as of such dates. As described 

above, the Bridge Commitment Parties have also been engaged to arrange permanent bank and debt 

securities exit financings, which, if consummated, would result in the payment by the Debtors of 

certain additional fees. In the event the Debtors fail to use the Bridge Commitment Parties in 

connection with the financings for which they have been engaged, the Bridge Commitment Parties 

would be entitled to customary alternate transaction fees. The aggregate fees payable by the Debtors 

pursuant to the Debt Financing Commitment Letters will depend on a variety of factors, including the 

length of time the Bridge Commitments and/or Bridge Facilities remain outstanding, the amount of 

the Bridge Facilities funded and the type and size of the applicable exit financing or alternate 

transaction. 
 32

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(“The fees, premiums, and . . . expenses provided for or permitted by the Debt Backstop Agreement 

(including . . . the Debt Backstop Commitment Premium, the Additional Premium, the Debt Expense 

Reimbursement, and the Debt Backstop Indemnity Obligations) are hereby approved as reasonable, 

[and] shall constitute allowed administrative expense claims pursuant to section 503(b) of the 

Bankruptcy Code . . . .”). 

In exchange for the Debtors’ agreement to pay the Exit Financing Obligations, the 

Debtors will receive substantial benefits. The Exit Financing Obligations are necessary inducements 

for the Exit Commitment Parties to enter into the Exit Financing Commitment Letters, are favorable 

relative to market and are staged over time so that only incurred as conditionality is reduced. Given 

the magnitude of the commitments of the Exit Commitment Parties, the Debtors have determined, in 

their business judgment, to incur the Exit Financing Obligations to provide assurances of their ability 

to consummate their Plan on the Effective Date. 

For the foregoing reasons, the Debtors respectfully submit that approval of the Exit 

Financing Commitment Letters is in the best interest of their estates and an appropriate exercise of 

their business judgment. 

V. WAIVER OF BANKRUPTCY RULE 6004(h) 

To implement the foregoing, the Debtors respectfully request the waiver of the 14-day 

stay under Bankruptcy Rule 6004(h). Pursuant to Bankruptcy Rule 6004(h), “[a]n order authorizing 

the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days 

after entry of the order, unless the court orders otherwise”. Fed. R. Bankr. P. 6004(h). For the reasons 

described above, the relief requested herein allows the Debtors to achieve greater certainty around the 

financing of their Plan. 

VI. NOTICE 

Notice of this Motion will be provided to (i) the Office of the United States Trustee for 

Region 17 (Attn: Andrew Vara, Esq. and Timothy Laffredi, Esq.); (ii) counsel to the Creditors 

Committee; (iii) counsel to the Tort Claimants Committee; (iv) the Securities and Exchange 

Commission; (v) the Internal Revenue Service; (vi) the Office of the California Attorney General; (vii) 
 33

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the California Public Utilities Commission; (viii) the Nuclear Regulatory Commission; (ix) the Federal 

Energy Regulatory Commission; (x) the Office of the United States Attorney for the Northern District 

of California; (xi) counsel for the agent under the Debtors’ debtor-in-possession financing facilities; 

(xii) counsel for the Equity Backstop Parties; (xiii) counsel for the Initial Bridge Commitment Parties; 

and (xiv) those persons who have formally appeared in these Chapter 11 Cases and requested service 

pursuant to Bankruptcy Rule 2002 (collectively, the “Notice Parties”). The Debtors respectfully 

submit that no further notice is required. 

No previous request for the relief sought herein has been made by the Debtors. 

[Signature on next page] 

 
 34

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WHEREFORE the Debtors respectfully request entry of the proposed orders granting 

(i) the relief requested herein and (ii) such other and further relief as the Court may deem just and 

appropriate. 

Dated: October 23, 2019 

 WEIL, GOTSHAL & MANGES LLP 

 CRAVATH, SWAINE & MOORE LLP 

 KELLER & BENVENUTTI LLP

 /s/ Paul H. Zumbro

 Paul H. Zumbro 

Attorneys for Debtors and Debtors in Possession