January 22, 2019 / 3:53 PM / 4 months ago

PG&E shares surge as company secures $5.5 billion in bankruptcy financing

Employees of Pacific Gas & Electric (PG&E) work in the aftermath of the Camp Fire in Paradise, California, U.S., November 14, 2018. REUTERS/Terray Sylvester

(Reuters) - U.S. power producer PG&E Corp’s shares surged as much as 16 percent on Tuesday after it said it had secured $5.5 billion in debtor-in-possession (DIP) financing from four banks as it prepares to file for Chapter 11 bankruptcy protection.

The financing will comprise a $3.5 billion revolving credit facility, a $1.5 billion term loan and a $500 million delayed-draw term loan.

Investment banks JPMorgan Chase & Co, Bank of America Merrill Lynch, Barclays Plc and Citigroup Inc will provide financing, the company said in a filing. (bit.ly/2MoM4NX)

It expects to file for bankruptcy on or about Jan. 29.

Separately on Tuesday, PG&E shareholder BlueMountain Capital Management LLC urged the power producer to delay its plans to file for bankruptcy. (bit.ly/2sOTn8N)

The asset manager, which owns about 11 million shares in PG&E, or about 2.1 percent of the company, had said last week filing for bankruptcy protection was unnecessary.

PG&E, which provides electricity and natural gas to 16 million customers in northern and central California, faces widespread litigation, government investigations and liabilities that could potentially exceed $30 billion because of wildfires in the state.

Its shares were last up about 9 percent on Tuesday afternoon.

Reporting by Debroop Roy in Bengaluru; Editing by Shinjini Ganguli

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