On December 4, 2023, PG&E Corporation (the “Company”) completed the sale of $2,150,000,000 aggregate principal amount of 4.25% Convertible Senior Secured Notes due 2027 (the “Convertible Notes”), which included an additional $250,000,00 aggregate principal amount of Convertible Notes purchased pursuant to the full exercise of the option granted to the Initial Purchasers (as defined herein) pursuant to the Purchase Agreement (as defined herein), in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Convertible Notes were sold under a purchase agreement (the “Purchase Agreement”) dated November 29, 2023 among the Company and the initial purchasers (the “Initial Purchasers”) party thereto. The Convertible Notes mature on December 1, 2027, unless earlier converted or repurchased. The Convertible Notes bear interest at a rate of 4.25% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2024.

The Convertible Notes are general senior secured obligations of the Company and are secured on a first lien basis by the pledge of the Company’s ownership interest in 100% of the shares of common stock of its principal subsidiary, Pacific Gas and Electric Company (the “Utility”), and any other shares of common stock of the Utility obtained by the Company in the future and the certificates or instruments representing such shares of common stock (collectively, “Collateral”), subject to certain permitted liens. The pledge of the Collateral is pursuant to the Pledge Agreement, dated as of July 1, 2020, among the Company, JPMorgan Chase Bank, N.A., as collateral agent, revolving administrative agent, The Bank of New York Mellon Trust Company, N.A. and the secured representatives party thereto from time to time.

The Convertible Notes are not initially be guaranteed by the Utility or any of the Company’s other subsidiaries. The Convertible Notes rank equal in right of payment with all of the Company’s existing and future senior obligations; rank effectively junior to all of the Company’s existing and future senior secured obligations that are secured by assets other than the Collateral to the extent of the value of such assets securing such obligations; rank effectively junior to all existing and future senior secured obligations under the Company’s revolving credit facility to the extent of the value of the Collateral (up to an amount not to exceed $650 million), and equal with all of the Company’s other existing and future senior secured obligations to the extent secured by the Collateral; rank effectively senior to any of the Company’s existing and future unsecured obligations to the extent of the value of the Collateral; rank senior in right of payment to all of the Company’s future subordinated indebtedness; and are structurally subordinated to all indebtedness and other obligations (including trade payables, other secured and unsecured indebtedness and preferred stock obligations) of the Utility and all of the Company’s other subsidiaries (other than any subsidiaries that may become guarantors in the future).

The Company issued the Convertible Notes pursuant to an indenture (the “Indenture”), dated as of December 4, 2023 by and among the Company, The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and JPMorgan Chase Bank, N.A., as collateral agent.

Prior to the close of business on the business day immediately preceding September 1, 2027, the Convertible Notes are convertible only upon the occurrence of certain events and during certain periods. On or after September 1, 2027, the Convertible Notes are convertible by holders at any time in whole or in part until the close of business on the business day immediately preceding the maturity date. The Company will settle conversions of the Convertible Notes by paying or delivering, as the case may be, cash, shares of the Company’s common stock, no par value (“Common Stock”), or a combination of cash and shares of Common Stock (“Combination Settlement”), at its election. The Company’s current intent and policy is to settle conversions through Combination Settlement with a specified dollar amount (payable in cash) per $1,000 principal amount of Convertible Notes of $1,000.

The conversion rate for the Convertible Notes is initially 43.1416 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $23.18 per share of Common Stock). The initial conversion price of the Convertible Notes represents a premium of approximately 35.0% over the last reported sale price of the Company’s common stock on The New York Stock Exchange on November 29, 2023. The conversion rate and the corresponding conversion price are subject to adjustment in connection with some events but will not be adjusted for any accrued and unpaid interest. The Company may not redeem the Convertible Notes prior to the maturity date.

If the Company undergoes a Fundamental Change (other than an Exempted Fundamental Change, each as defined in the Indenture), subject to certain conditions, holders of the Convertible Notes may require the Company to repurchase for cash all or any portion of their Convertible Notes at a repurchase price equal to 100% of the principal amount of Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the Fundamental Change Repurchase Date (as defined in the Indenture). In addition, if certain corporate events occur, the Company may be required, in certain circumstances, to increase the conversion rate for any Convertible Notes converted in connection with such corporate events by a specified number of shares of its Common Stock. The Indenture provides for customary events of default, which include (subject in certain cases to grace and cure periods), among others: nonpayment of principal or interest; breach of

covenants or other agreements in the Indenture; and certain events of bankruptcy, insolvency or reorganization. Generally, if an event of default occurs and is continuing under the Indenture, either the Trustee or the holders of at least 33% in aggregate principal amount of the Convertible Notes then outstanding may declare the principal amount plus accrued and unpaid interest on the Convertible Notes to be immediately due and payable.

The disclosure in this Item 2.03 is qualified in its entirety by the provisions of the Indenture, together with the form of global note evidencing the Convertible Notes included therein, which is filed as Exhibit 4.1 hereto and the Pledge Agreement, which is incorporated by reference as Exhibit 4.2 hereto. Such exhibits are incorporated herein by reference.

 

 

8-K

 

The Convertible Notes and the underlying shares of Common Stock issuable upon conversion of the Convertible Notes, if any, have not been and will not be registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Initially, the maximum number of shares of Common Stock issuable upon conversion of the Convertible Notes, including pursuant to any increase in the conversion rate for any Convertible Notes converted in connection with a Make-Whole Fundamental Change, is 125,218,365, subject to anti-dilution adjustments.

 

(d) Exhibits

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.