PG&E (NYSE:PCG) Corporation has announced a significant financial maneuver with the unveiling of a private placement worth $1.5 billion in Convertible Senior Secured Notes due to mature on December 1, 2027. This strategic move is aimed at addressing the company's existing debt obligations, specifically to repay a portion of a $2.66 billion term loan that was initiated in June 2020 and which, as of last Friday, carried an interest rate of approximately 8.44%.
The notes, which will be secured by current and future shares of Pacific Gas and Electric Company, are set to rank on par with or above other senior debts of PG&E but will not be backed by any subsidiaries. The terms of the offering include an additional purchase option of $225 million for initial investors, which provides a substantial opportunity for expansion of the offering.
Investors who take part in this offering can expect their first interest payment to be made on June 1, 2024. The offering has been structured to allow conversions under certain conditions before September 1, 2027. After this date, conversions can be made at any time up until just before the notes reach maturity. In terms of settlement, PG&E has chosen a Combination Settlement approach, which means conversions will be resolved using both cash and stock.
The final terms of the offering, including the interest rate and the initial conversion ratio, are yet to be determined and will be set at the pricing stage of the offering.
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