PG&E turns down San Francisco's $2.5 billion offer to buy assets

FILE PHOTO: A PG&E truck carrying an American Flag drives past PG&E repair trucks in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

(Reuters) - PG&E Corp rejected a $2.5 billion offer from San Francisco to buy the bankrupt Californian company’s power lines and other infrastructure within the city, calling the offer inadequate.

The offer significantly undervalued the assets and a deal would not be in the best interest of the company’s customers, PG&E’s chief executive officer, Bill Johnson, wrote in a letter to San Francisco Mayor London Breed and City Attorney Dennis Herrera.

The company’s financing strategy to emerge from bankruptcy did not include selling off company assets, Johnson said in the letter, which was dated Oct. 7.

“Although we cannot accept your offer, we want to clearly communicate that PG&E intends to continue working with the City to best serve the citizens and businesses of San Francisco,” Johnson wrote.

San Francisco had made the offer in September, eight months after the utility sought Chapter 11 bankruptcy protection.

Breed and Herrera responded on Friday by saying that San Francisco would continue to pursue the acquisition of PG&E’s electrical assets. They said in a statement that arguments made by the company on the proposal were “inconsistent” with the comprehensive analysis done by the city and its financial advisers.

“We aren’t surprised by PG&E’s response so far,” the two officials said. “We’re also not giving up. Now more than ever, it is clear that we must take back control of San Francisco’s electric service and achieve energy independence.”

Reporting by Shanti S Nair in Bengaluru; Editing by Shinjini Ganguli and Leslie Adler