PG&E Corporation (NYSE:PCG) announced on Monday the completion of a $500 million sale in aggregate principal amount of 7.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055. This transaction, part of a series initially issued on September 11, 2024, brings the total outstanding Notes to $1.5 billion.
The sale was conducted under an existing Subordinated Note Indenture between PG&E Corporation and The Bank of New York Mellon (NYSE:BK) Trust Company, N.A., serving as trustee. The offering's underwriting agreement, dated November 13, 2024, involved major financial institutions including Barclays (LON:BARC) Capital Inc., BofA Securities, Inc., Mizuho (NYSE:MFG) Securities USA LLC, and Wells Fargo (NYSE:WFC) Securities, LLC.
The Notes, which are junior subordinated debentures, have a fixed interest rate until the reset date, after which the rate will be adjusted. The terms and conditions of the Notes are detailed in the First Supplemental Indenture, which supplements the Original Indenture dated September 11, 2024.
Legal opinions concerning the Notes have been provided by Hunton Andrews Kurth LLP, as indicated in the exhibits attached to PG&E's SEC filing. These documents include the Underwriting Agreement (Exhibit 1.1), the Subordinated Note Indenture (Exhibit 4.1), the First Supplemental Indenture (Exhibit 4.2), and the legal opinions (Exhibits 5.1 and 8.1).
The completion of this sale on November 15, 2024, was confirmed by Carolyn J. Burke, Executive Vice President and Chief Financial Officer of PG&E Corporation, and Stephanie N. Williams, Vice President, Chief Financial Officer, and Controller of Pacific Gas and Electric Company.
In other recent news, PG&E Corporation has reported solid growth and plans to expand its capital plan. The company's Third Quarter 2024 Earnings Call revealed a 10% growth in core earnings per share (EPS) over the previous year, and an updated EPS guidance range of $1.34 to $1.37 for 2024. In addition, PG&E announced an increase of $1 billion in its five-year capital plan, which now totals $63 billion through 2028. The firm's financial plan also includes reducing $2 billion in corporate debt by 2026 and planning for $3 billion in equity through an at-the-market program.
The company reported a significant reduction in major fires linked to its equipment and successful claims from the state Wildfire Fund. PG&E's plans to add $5 billion in customer-driven projects have been bolstered by securing $8 billion in capital. The company's outlook includes meeting California's growing energy demands while maintaining affordability and efficient capital management.
InvestingPro Insights
PG&E Corporation's recent $500 million sale of junior subordinated notes aligns with its financial strategy, which includes managing a significant debt burden, as highlighted by InvestingPro Tips. Despite this, the company's financial health appears robust, with a market capitalization of $44.91 billion and a price-to-earnings ratio of 16.29, suggesting reasonable valuation relative to earnings.
InvestingPro Tips indicate that PG&E is trading near its 52-week high and has shown strong returns over the last five years, which may reflect investor confidence in the company's financial management and future prospects. The company's profitability is also noteworthy, with a gross profit of $9.53 billion and an operating income margin of 21.47% for the last twelve months as of Q3 2024.
While the newly issued notes will add to PG&E's debt, the company's revenue growth of 9.1% over the same period suggests it may have the capacity to service this additional debt. Investors considering PG&E should note that analysts predict the company will remain profitable this year, which could support its ability to meet its financial obligations.
For a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into PG&E's financial position and future outlook.
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