PG&E Corporation has completed the sale of $500 million in 7.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due in 2055, as disclosed in a recent SEC filing. The sale, which took place on Friday, was part of a series that began on September 11, 2024, bringing the total outstanding principal amount for this series to $1.5 billion.
The notes were issued under an indenture agreement with The Bank of New York Mellon (NYSE:BK) Trust Company, N.A., serving as trustee. This agreement was initially established in September and was supplemented by a first supplemental indenture on the same date.
The offering was facilitated by a group of underwriters including Barclays (LON:BARC) Capital Inc., BofA Securities, Inc., Mizuho (NYSE:MFG) Securities USA LLC, and Wells Fargo (NYSE:WFC) Securities, LLC, as outlined in the underwriting agreement dated November 13, 2024.
Legal opinions regarding the issuance were provided by Hunton Andrews Kurth LLP, as part of the transaction's documentation.
The notes are junior subordinated, meaning they rank below other forms of debt in terms of claims on assets in the event of a liquidation. The fixed-to-fixed reset rate feature indicates that the interest rate on the notes will reset after a predetermined period.
In other recent news, PG&E Corporation has reported robust growth in its third quarter 2024 earnings call, showcasing a 10% increase in core earnings per share (EPS) over the previous year, with an updated EPS guidance range of $1.34 to $1.37 for 2024. The company also announced the completion of a $500 million sale in aggregate principal amount of 7.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055, bringing the total outstanding Notes to $1.5 billion. This transaction was conducted under an existing Subordinated Note Indenture between PG&E Corporation and The Bank of New York Mellon Trust Company, N.A., with the involvement of major financial institutions such as Barclays Capital Inc., BofA Securities, Inc., Mizuho Securities USA LLC, and Wells Fargo Securities, LLC.
The company has also expanded its five-year capital plan by $1 billion, now totaling $63 billion through 2028. This plan includes reducing $2 billion in corporate debt by 2026 and planning for $3 billion in equity through an at-the-market program. Furthermore, PG&E reported a significant reduction in major fires linked to its equipment and successful claims from the state Wildfire Fund.
In addition, the firm is planning to add $5 billion in customer-driven projects, having already secured $8 billion in capital. These are part of the recent developments at PG&E Corporation, a company that continues to focus on operational efficiencies, cost reductions, and strategic investments to support California's growing energy demands while maintaining affordability and efficient capital management.
InvestingPro Insights
PG&E Corporation's recent $500 million debt issuance aligns with its current financial profile, as highlighted by InvestingPro data and tips. The company operates with a significant debt burden, which this new issuance further contributes to. Despite this, PG&E's financial metrics show some positive indicators.
InvestingPro data reveals that PG&E has a market capitalization of $44.91 billion and is trading at a P/E ratio of 16.29. The company's revenue for the last twelve months as of Q3 2024 stood at $24.83 billion, with a revenue growth of 9.1% over the same period. This growth suggests that PG&E has been able to expand its operations despite its debt load.
An InvestingPro Tip indicates that PG&E is trading at a low P/E ratio relative to its near-term earnings growth, which could be attractive to value investors. Additionally, the stock is trading near its 52-week high, reflecting positive market sentiment despite the company's debt situation.
It's worth noting that while PG&E has been profitable over the last twelve months, 5 analysts have revised their earnings downwards for the upcoming period. This could be a factor for investors to consider in light of the new debt issuance.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights on PG&E's financial health and market position. There are 7 more InvestingPro Tips available for PG&E, providing a deeper understanding of the company's financial outlook.
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