SAN FRANCISCO, June 27, 2002 -- Pacific Gas and Electric Co. on Tuesday strongly protested the California Public Utilities Commission's (PUC) action in retaining UBS Warburg as its financing and capital markets arranger.
The utility's statement follows.
"The CPUC's alternative plan of reorganization goes far beyond any legitimate role of government. The commission's plan is to rip the company apart and devalue the stock to finance payments to creditors. The CPUC is doing this without regard to the interest of employees, shareholders or customers.
"It is no surprise that the commission could find a financier who would be attracted to a deal that discounts and dilutes the value of PG&E's stock. However, this plan is illegal and infeasible, and would result in the company being unable to invest capital in needed infrastructure. Furthermore, the CPUC's plan would not return PG&E to investment-grade status, a necessary step to get the State of California out of the power buying business.
"The CPUC's plan would be financed on the backs of PG&E's employees, retirees and other shareholders, many of whom have 401(k) retirement accounts that include thousands of shares of the company's stock. PG&E does not believe the CPUC plan can or will be confirmed.
"In contrast, PG&E's plan of reorganization is simple and fair -- it borrows against the value of the assets to raise the money to pay creditors. PG&E's plan protects employees' jobs and retirement benefits and provides means to invest more than $1 billion a year in the gas and electric system to meet the growing needs of customers.
"PG&E has developed the only practical solution that allows the company to emerge from Chapter 11 as an investment-grade company, gives the State of California a clearly defined path to exit the power buying business and does so without asking the Bankruptcy Court to raise rates or the State for a bailout."