PG&E Gets Waiver on Loan Provision
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SAN FRANCISCO (AP) _ PG&E Corp. on Monday said it received a reprieve from a $1 billion loan provision requiring the company’s unregulated energy trading arm to maintain a top-tier credit rating.
The waiver gives PG&E more time to address a problem that cropped up earlier this month when Standard & Poor’s lowered the credit rating of the company’s National Energy Group into junk territory.
The action triggered a clause allowing General Electric Capital and several other lenders to demand immediate repayment on the loans. The lenders initially agreed to waive the credit rating requirement through Aug. 16 before consenting to the extension disclosed Monday.
The extension prohibits PG&E from investing more than $15 million in the National Energy Group and its regulated utility, Pacific Gas and Electric, except for expenditures required by state law, according to Securities and Exchange Commission documents.
PG&E also must set up a reserve account to cover interest payments on the loan, the SEC documents said.
The company also faces potential complications on another $280 million in debt if it can’t work out new provisions on the $1 billion debt. PG&E said it is trying to modify the loan terms during the extension period.
PG&E’s shares dipped by a penny to close at $11.25 Monday on the New York Stock Exchange.
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