Bankrupt California power producer PG&E Corp. is close to finalizing terms for a $13.5 billion payout to victims of wildfires triggered by its power lines, Bloomberg reported on Wednesday, citing people familiar with the matter.
The payment will be made half in cash and the rest in stock in the newly reorganized utility, according to the report.
Reaching a settlement with individual victims of wildfires linked to its equipment would remove the biggest hurdle to ending the company’s bankruptcy, which was filed in January in the face of $30 billion of liability from fires in 2017 and 2018.
The company had proposed paying the victims no more than $8.4 billion in September.
The wildfire victims had opposed the company’s reorganization plan and allied themselves with PG&E bondholders, who proposed their own reorganization plan.
PG&E on Wednesday said it would continue to work with individual claimants to “fairly and reasonably resolve their claims.”
If a settlement with wildfire victims is reached, it would make it harder for bondholders to disrupt the company’s bankruptcy planning.
The company has proposed paying bondholders in full, which could deny the bondholders a chance to vote against its reorganization plan.
PG&E still has to determine how much it owes the U.S. government, the state of California and the Adventist health system, which have claimed billions of dollars.
The power provider is under a tight deadline. It must exit bankruptcy by June 30 to participate in a state-backed wildfire fund that would help reduce the threat to utilities from wildfires.
California Governor Gavin Newsom has floated the idea that the state could take over the utility if it cannot find a viable plan.
PG&E has reached settlements with two of three major groups of wildfire claims holders, including a $1 billion settlement with cities, counties and other public entities and an $11 billion agreement with insurance carriers related to 2017 and 2018 wildfires in California.
(Reporting by Arunima Kumar in Bengaluru and Tom Hals in Wilmington, Del; Editing by Arun Koyyur and Anil D’Silva)
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