| Entry into a Material Definitive Agreement |
On November 15, 2023, Pacific Gas and Electric Company (the “
Utility
”), Barclays Bank PLC and each of the lenders party thereto and Barclays Bank PLC, as administrative agent (the “
Administrative Agent
”), entered into a Bridge Term Loan Credit Agreement (the “
Bridge Term Loan Credit Agreement
”), pursuant to which the lenders agreed to make available to the Utility term loans in the aggregate principal amount equal to $2,100,000,000 (the “
Term Loans
”). The Utility borrowed the entire amount of the Term Loans on November 15, 2023. The Term Loans have a maturity date of August 15, 2024. The Utility is required to prepay loans outstanding under the Bridge Term Loan Credit Agreement, subject to certain exceptions, with 100% of the net cash proceeds received by the Utility from the issuance or incurrence of any debt by its subsidiary, Pacific Generation LLC.
Borrowings under the Bridge Term Loan Credit Agreement bear interest based on the Utility’s election of either (1) Term SOFR (as defined in the Bridge Term Loan Credit Agreement) (plus a 0.10% credit spread adjustment) plus an applicable margin of 1.25% or (2) the alternative base rate plus an applicable margin of 0.25%.
The Utility’s obligations under the Bridge Term Loan Credit Agreement are secured by the issuance of a first mortgage bond, issued pursuant to the Twenty-Second Supplemental Indenture (as defined herein) to the Mortgage Indenture (as defined herein), secured by a first lien on substantially all of the Utility’s real property and certain tangible personal property related to its facilities, subject to certain exceptions, and which will rank
with the Utility’s other first mortgage bonds.
The Bridge Term Loan Credit Agreement includes usual and customary provisions for term loan agreements of this type, including covenants limiting, with certain exceptions, (1) liens, (2) sale and leaseback transactions, (3) fundamental changes, (4) entering into swap agreements and (5) modifications to the Mortgage Indenture. In addition, the Bridge Term Loan Credit Agreement requires that the Utility maintain a ratio of total consolidated debt to consolidated capitalization of no greater than 65% as of the end of each fiscal quarter.
In the event of a default by the Utility under the Bridge Term Loan Credit Agreement, including cross-defaults relating to specified other debt of the Utility or any of its significant subsidiaries in excess of $200 million, the Administrative Agent may, with the consent of the required lenders (or upon the request of the required lenders, shall), declare the amounts outstanding under the Bridge Term Loan Credit Agreement, including all accrued interest, payable immediately. For events of default relating to insolvency, bankruptcy or receivership, the amounts outstanding under the Bridge Term Loan Credit Agreement become payable immediately.
The foregoing description of the Bridge Term Loan Credit Agreement is qualified in its entirety by reference to the full text of the Bridge Term Loan Credit Agreement, which is attached as Exhibit 10.1 hereto and incorporated by reference herein.
The lenders under the Bridge Term Loan Credit Agreement and/or their affiliates have in the past provided, and may in the future provide, investment banking, underwriting, lending, commercial banking and other advisory services to PG&E Corporation and the Utility. Such lenders have received, and may in the future receive, customary compensation from PG&E Corporation and the Utility for such services.
| Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information set forth in Item 1.01 is incorporated into this Item 2.03 by reference.
In connection with the Bridge Term Loan Credit Agreement, on November 15, 2023, the Utility and The Bank of New York Mellon Trust Company, N.A., as trustee (the “
Trustee
”) under that certain Indenture of Mortgage, dated as of June 19, 2020 (as amended and supplemented, the “
Mortgage Indenture
”), between the Utility and the Trustee entered into a Twenty-Second Supplemental Indenture to the Mortgage Indenture in order to issue a collateral bond to secure the Utility’s obligations under the Bridge Term Loan Credit Agreement.
