DEBT

Debtor In Possession ("DIP") Facilities

In connection with the Chapter 11 Cases, PG&E Corporation and the Utility entered into a Senior Secured Superpriority Debtor in Possession Credit, Guaranty and Security Agreement, dated as of February 1, 2019 (the “DIP Credit Agreement”), among the Utility, as borrower, PG&E Corporation, as guarantor, JPMorgan Chase Bank, N.A., as administrative agent, Citibank, N.A., as collateral agent, and the lenders and issuing banks party thereto (together with such other financial institutions from time to time party thereto, the "DIP Lenders"). The DIP Credit Agreement provides for $5.5 billion in senior secured superpriority debtor in possession credit facilities in the form of (i) a revolving credit facility in an aggregate amount of $3.5 billion (the “DIP Revolving Facility”), including a $1.5 billion letter of credit subfacility, (ii) a term loan facility in an aggregate principal amount of $1.5 billion (the “DIP Initial Term Loan Facility”) and (iii) a delayed draw term loan facility in an aggregate principal amount of $500 million (the “DIP Delayed Draw Term Loan Facility”, together with the DIP Revolving Facility and the DIP Initial Term Loan Facility, the “DIP Facilities”), subject to the terms and conditions set forth therein.

On the Petition Date, PG&E Corporation and the Utility filed a motion seeking, among other things, interim and final approval of the DIP Facilities, which motion was granted on an interim basis by the Bankruptcy Court following a hearing on January 31, 2019. As a result of the Bankruptcy Court’s interim approval of the DIP Facilities and the satisfaction of the other conditions thereof, the DIP Credit Agreement became effective on February 1, 2019 and a portion of the DIP Revolving Facility in the amount of $1.5 billion (including $750 million of the letter of credit subfacility) was made available to PG&E Corporation and the Utility. As of February 28, 2019, the remainder of the DIP Revolving Facility (including the remainder of the $1.5 billion letter of credit subfacility), the DIP Initial Term Loan Facility and the DIP Delayed Draw Term Loan Facility are unavailable for borrowing and will remain unavailable until and unless the Bankruptcy Court approves the availability thereof following a final hearing. PG&E Corporation and the Utility are unable to predict the date of the final hearing, but it is currently scheduled for March 13, 2019. There can be no assurances that the Bankruptcy Court will grant final approval of the DIP Facilities at the final hearing, or at all.

Borrowings under the DIP Facilities are senior secured obligations of the Utility, secured by substantially all of the Utility’s assets and entitled to superpriority administrative expense claim status in the Utility’s Chapter 11 Case. The Utility’s obligations under the DIP Facilities are guaranteed by PG&E Corporation, and such guarantee is a senior secured obligation of PG&E Corporation, secured by substantially all of PG&E Corporation’s assets and entitled to superpriority administrative expense claim status in PG&E Corporation’s Chapter 11 Case.

The DIP Facilities mature on December 31, 2020, subject to the Utility’s option to extend the maturity to December 31, 2021 if certain terms and conditions are satisfied, including the payment of an extension fee equal to 0.25% of the then-outstanding loans and available commitments. Borrowings under the DIP Facilities will bear interest based, at the Utility’s election, on (1) LIBOR plus an applicable margin or (2) ABR plus an applicable margin. ABR will equal the highest of the following: (i) the administrative agent’s announced base rate, (ii) 0.50% above the (x) federal funds effective rate or (y) the overnight federal funds rate, whichever is higher, (iii) one-month LIBOR plus 1.00% and (iv) zero. With respect to the DIP Revolving Facility, the DIP Initial Term Loan Facility and the DIP Delayed Draw Term Loan Facility, the applicable margin is 2.25% for LIBOR loans and 1.25% for ABR loans.

The Utility is also required to pay unused fees of (i) 0.375% per annum in respect of the average daily unutilized commitments under the DIP Revolving Facility and (ii) 1.125% per annum, which amount shall increase to 2.25% per annum after six months, in respect of the average daily unutilized commitments under the DIP Delayed Draw Term Loan Facility. The Utility must also pay (x) a fee equal to the applicable margin with respect to LIBOR loans under the DIP Revolving Facility on the aggregate drawable amount of all outstanding letters of credit under the DIP Revolving Facility and (y) a fronting fee to the relevant issuing DIP Lender equal to 0.125% per annum of the aggregate drawable amount of outstanding letters of credit issued by such issuing DIP Lender.

The DIP Credit Agreement includes usual and customary covenants for debtor in possession loan agreements of this type, including covenants limiting PG&E Corporation’s and the Utility’s ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of junior or pre-petition indebtedness, in each case subject to customary exceptions for debtor in possession loan agreements of this type.

The DIP Credit Agreement also includes customary and usual representations and warranties and affirmative covenants, including an obligation to deliver 13-week cash flow forecasts and reports showing variances from such forecasts, in each case on a rolling 4-week basis. PG&E Corporation’s and the Utility’s obligations under the DIP Credit Agreement may be accelerated following certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to post-petition or unstayed indebtedness of PG&E Corporation and the Utility and their subsidiaries in excess of $200 million, certain events under ERISA, unstayed judgments in respect of post-petition obligations involving an aggregate liability in excess of $200 million, change of control, specified governmental actions having a material adverse effect or condemnation or damage to a material portion of the collateral. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to Chapter 11, any order authorizing the DIP Facilities being stayed, vacated, reversed or amended in a manner adverse to the DIP Lenders, the final order approving the DIP Facilities failing to have been entered by April 15, 2019, and certain other events related to the impairment of the DIP Lenders’ rights or liens granted under the DIP Credit Agreement.

The proceeds of the borrowings under the DIP Facilities will be used for working capital and general corporate purposes and to pay fees, costs and expenses incurred in connection with the transactions contemplated by the DIP Credit Agreement and professional and other fees and costs of administration incurred in connection with the Chapter 11 Cases.

Long-Term Debt

Debt Obligations Previously Classified as Long Term

The following table summarizes PG&E Corporation’s and the Utility’s long-term debt:



		December 31,
(in millions)		2018			2017
PG&E Corporation
Term Loan:
Stated Maturity	Interest Rates
2020	variable rate ⁽²⁾	350			350
Less: Current Portion⁽¹⁾		(350		)	—
Total PG&E Corporation long-term debt		—			350
Utility
Senior notes:
Stated Maturity	Interest Rates
2018	8.25%	—			400
2020	3.50%	800			800
2021	3.25% to 4.25%	550			550
2022	2.45%	400			400
2023 through 2046	2.95% to 6.35%	15,775			14,975
Unamortized discount, net of premium and debt issuance costs		(178		)	(185		)
Less: current portion⁽¹⁾		(17,347		)	(400		)
Total senior notes, net of current portion		—			16,540
Pollution control bonds:
Stated Maturity	Interest Rates
Series 2008 G, due 2018	1.05%	—			45
Series 2008 F and 2010 E, due 2026 ⁽³⁾	1.75%	100			100
Series 2009 A-B, due 2026 ⁽⁴⁾	variable rate ⁽⁵⁾	149			149
Series 1996 C, E, F, 1997 B due 2026 ⁽⁴⁾	variable rate ⁽⁶⁾	614			614
Less: current portion⁽¹⁾		(863		)	(45		)
Total pollution control bonds		—			863
Total Utility long-term debt, net of current portion		—			17,403
Total consolidated long-term debt, net of current portion		$	—		$	17,753

⁽¹⁾On January 29, 2019, PG&E Corporation and the Utility commenced reorganization under Chapter 11 of the U.S. Bankruptcy Code. The commencement of the Chapter 11 Cases constituted an event of default or termination event under the above-referenced debt of PG&E Corporation and the Utility. With the exception of Pollution Control Bonds series 2008F and 2010E, where a trustee notice is required to trigger acceleration, the commencement of the Chapter 11 Cases caused an automatic and immediate acceleration of such debt, and the possibility of cure is uncertain. Therefore, all long-term debt is classified as current as of December 31, 2018.

⁽²⁾ At December 31, 2018, the interest rate on the Term Loan was 3.66%.

⁽³⁾Pollution Control Bonds series 2008F and 2010E were remarketed and issued in June 2017. Although the stated maturity date for both series is 2026, these bonds have a mandatory redemption date of May 31, 2022.

⁽⁴⁾Each series of these bonds is supported by a separate direct-pay letter of credit. Subject to certain requirements, the Utility may choose not to provide a credit facility without issuer consent. Series 2009 A-B bonds have a maturity date of June 5, 2019. In December 2015, Series 1996 C, E, F, 1997 B bonds the letters of credit were extended to December 1, 2020. Although the stated maturity date is 2026, each series will remain outstanding only if the Utility extends or replaces the letter of credit related to the series or otherwise obtains consent from the issuer to the continuation of the series without a credit facility.

⁽⁵⁾At December 31, 2018, the interest rate on these bonds was 2.08%.

⁽⁶⁾At December 31, 2018, the interest rate on these bonds ranged from 2.05% to 2.15%.

Pollution Control Bonds

The California Pollution Control Financing Authority and the California Infrastructure and Economic Development Bank have issued various series of fixed rate and multi-modal tax-exempt pollution control bonds for the benefit of the Utility. Substantially all of the net proceeds of the pollution control bonds were used to finance or refinance pollution control and sewage and solid waste disposal facilities at the Geysers geothermal power plant or at the Utility’s Diablo Canyon nuclear power plant. In 1999, the Utility sold all bond-financed facilities at the non-retired units of the Geysers geothermal power plant to Geysers Power Company, LLC pursuant to purchase and sales agreements stating that Geysers Power Company, LLC will use the bond-financed facilities solely as pollution control facilities for so long as any tax-exempt pollution control bonds issued to finance the Geysers project are outstanding. Except for components that may have been abandoned in place or disposed of as scrap or that are permanently non-operational, the Utility has no knowledge that Geysers Power Company, LLC intends to cease using the bond-financed facilities solely as pollution control facilities.

Repayment Schedule

PG&E Corporation's and the Utility's long-term debt is in default, and the Accelerated Direct Financial Obligations became immediately due and payable upon the commencement of the Chapter 11 Cases. PG&E Corporation’s and the Utility’s combined stated long-term debt principal repayment amounts at December 31, 2018 are reflected in the table below:



(in millions,
except interest rates)	2019			2020			2021			2022			2023			Thereafter			Total
PG&E Corporation
Variable interest rate as of December 31, 2018	—		%	3.51		%	—		%	—		%	—		%	—		%	3.51		%
Variable rate obligations	$	—		$	350		$	—		$	—		$	—		$	—		$	350
Utility
Average fixed interest rate	—		%	3.50		%	3.80		%	2.31		%	3.83		%	4.74		%	4.52		%
Fixed rate obligations	$	—		$	800		$	550		$	500		$	1,175		$	14,600		$	17,625
Variable interest rate as of December 31, 2018	1.78		%	1.59		%	—		%	—		%	—		%	—		%	1.63		%
Variable rate obligations⁽¹⁾	$	149		$	614		$	—		$	—		$	—		$	—		$	763
Total consolidated debt	$	149		$	1,764		$	550		$	500		$	1,175		$	14,600		$	18,738

⁽¹⁾The bonds due in 2026 are backed by separate letters of credit that expire June 5, 2019, or December 1, 2020.

Short-term Borrowings

The following table summarizes PG&E Corporation’s and the Utility’s outstanding borrowings and availability under their revolving credit facilities and commercial paper programs at December 31, 2018:



(in millions)	Termination Date	Credit Facility Limit			Borrowings Against Revolver			Commercial Paper Outstanding		Facility Availability
PG&E Corporation	April 2022	$	300	(1)	$	300		$	—	$	—
Utility	April 2022	$	3,000	(2)	$	2,965	(3)	$	—	$	35
Total revolving credit facilities		$	3,300		$	3,265		$	—	$	35

⁽¹⁾Includes a $50 million lender commitment to the letter of credit sublimits and a $100 million commitment for swingline loans defined as loans that are made available on a same-day basis and are repayable in full within 7 days.

⁽²⁾ Includes a $500 million lender commitment to the letter of credit sublimits and a $75 million commitment for swingline loans.

⁽³⁾ Includes $80 million of letters of credit.

For the year ended December 31, 2018, PG&E Corporation’s average outstanding commercial paper balance was $29 million and the maximum outstanding balance during the year was $137 million. For the year ended December 31, 2018, the Utility’s average outstanding commercial paper balance was $9 million and the maximum outstanding balance during the year was $205 million. As of December 31, 2018, PG&E Corporation and the Utility each had no commercial paper borrowings outstanding. PG&E Corporation and the Utility do not expect to be able to access the commercial paper market for the duration of the Chapter 11 Cases.

The commencement of the Chapter 11 Cases constituted an event of default or termination event, and caused an automatic and immediate acceleration of the Accelerated Direct Financial Obligations. However, any efforts to enforce such payment obligations are automatically stayed as of the Petition Date, and are subject to the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The material Accelerated Direct Financial Obligations include the outstanding senior notes, agreements in respect of certain series of pollution control bonds, and PG&E Corporation's term loan facility, as well as short-term borrowings under PG&E Corporation's and the Utility's revolving credit facilities and the Utility's term loan facility. See Note 15 below for more information.

Revolving Credit Facilities

In May 2017, PG&E Corporation and the Utility each extended the termination dates of their existing revolving credit facilities by one year from April 27, 2021 to April 27, 2022. As previously disclosed, PG&E Corporation's and the Utility's revolving credit facilities have been subject to an automatic and immediate acceleration as a result of the Chapter 11 Cases. Prior to the Chapter 11 Cases, proceeds from the revolving credit facilities were used for working capital, the repayment of commercial paper, and other corporate purposes.

Borrowings under each credit agreement (other than swingline loans) previously bore interest based on the borrower’s credit rating and on each borrower’s election of either (1) LIBOR plus an applicable margin or (2) the base rate plus an applicable margin. The base rate equaled the higher of the following: the administrative agent’s announced base rate, 0.5% above the overnight federal funds rate, and the one-month LIBOR plus an applicable margin. The borrower’s credit rating at the time of borrowing determined the applicable rate within the following ranges. The applicable margin for LIBOR loans ranged between 0.9% and 1.475% under PG&E Corporation’s credit agreement and between 0.8% and 1.275% under the Utility’s credit agreement. The applicable margin for base rate loans ranged between 0% and 0.475% under PG&E Corporation’s credit agreement and between 0% and 0.275% under the Utility’s credit agreement. In addition, the facility fee under PG&E Corporation’s and the Utility’s credit agreements ranged between 0.1% and 0.275% and between 0.075% and 0.225%, respectively.

PG&E Corporation’s and the Utility’s revolving credit facilities include usual and customary provisions for revolving credit facilities of this type, including those regarding events of default and covenants limiting liens to those permitted under their senior note indentures, mergers, sales of all or substantially all of their assets, and other fundamental changes. In addition, the respective revolving credit facilities required that PG&E Corporation and the Utility maintain a ratio of total consolidated debt to total consolidated capitalization of at most 65% as of the end of each fiscal quarter. PG&E Corporation’s revolving credit facility agreement also required that PG&E Corporation own, directly or indirectly, at least 80% of the outstanding common stock and at least 70% of the outstanding voting capital stock of the Utility.

Commercial Paper Programs

The borrowings from PG&E Corporation’s and the Utility’s commercial paper programs were used primarily to fund temporary financing needs. PG&E Corporation and the Utility could issue commercial paper up to the maximum amounts of $300 million and $2.5 billion, respectively. PG&E Corporation and the Utility treated the amount of outstanding commercial paper as a reduction to the amount available under their respective revolving credit facilities. The commercial paper had maturities up to 365 days and ranked equally with PG&E Corporation’s and the Utility’s other unsubordinated and unsecured indebtedness. Commercial paper notes were sold at an interest rate dictated by the market at the time of issuance. For 2018, the average yield on outstanding PG&E Corporation and Utility commercial paper was 1.85% and 1.91%, respectively.

Other Short-term Borrowings

In February 2018, the Utility’s $250 million floating rate unsecured term loan, issued in February 2017, matured and was repaid. In February 2018, the Utility entered into a $250 million floating rate unsecured term loan. The proceeds were used for general corporate purposes, including the repayment of a portion of the Utility’s outstanding commercial paper. As a result of the Chapter 11 Cases, repayment of this loan, which was scheduled to mature on February 22, 2019, has been stayed.

As of December 31, 2018, PG&E Corporation and the Utility each had no commercial paper borrowings. PG&E Corporation and the Utility do not expect to be able to access the commercial paper market for the duration of the Chapter 11 Cases.

In November 2018, the Utility's $500 million floating rate unsecured term loan, issued in November 2017, matured and was repaid.