Christopher Edmonds on the PG&E bankruptcy
Christopher Edmonds
PG&E Filing
4/06/01 2:22 PM ET
While somewhat technical, the bankruptcy filing in California today is from Pacific Gas and Electric, the utility subsidairy of PG&E and not from the corporate parent. The significance isn't entirely clear since there has been a significant amount of "asset shuffling" between the utility and the parent, something that will likely be scrutinized in the bankruptcy process.
The question in PG&E's mind isnt if they make their creditor whole, but when. On the conference call just concluded, PG&E Chairman Robert Glynn made it clear they think they will collect all back power costs and be able to function as a protfiable entity and meet all credit obligations -- past and future. . .The filing is simply a way to facilitate that process given what he called "a dramatic slowing" in the political solutions from the state.
That said, and in reference to JJCs post earlier [that BAC's loans to PG&E were secured], PG&E was quite unclear about its willingness to pay any interest on debt - secured or unsecured -- through the process indicating the only exception allowed for in the bankruptcy code is mortgage debt which they will continue to service. While Jim's comments are absolutely correct, the uncertainty from the comments are putting pressure on creditors like Bank of America. The opportunity angle is prescient.
In addition to PG&E and Edison International, the power generators with interests in California seem to be feeling the impact of the pain. Stocks of companies like Calpine, Duke, Mirant, Reliant, and Dynegy are all weak on the news, although they have come back from earlier lows immediately following the announcement.
Sorry for the delay. . .on a short excursion to Memphis but the calls were overwhelming. However, its exactly one of the scenarios we envisioned.
More on the site soon. |
