PG&E; Creditors’ Committee Is Appointed
A committee of Pacific Gas & Electric Co. creditors--ranging from major banks and energy suppliers to the state of Tennessee and a tree-trimming company--has been selected to represent thousands of creditors in the utility’s bankruptcy case.
Taking a key step in administering the bankruptcy case, U.S. Trustee Linda Ekstrom Stanley on Tuesday selected 11 creditors who collectively will serve as the eyes, ears and decision makers for those who have unsecured claims against the utility.
In choosing companies that would represent various constituencies of creditors, Stanley selected four financial concerns and four energy suppliers with total claims of almost $5 billion.
She also named Davey Tree Expert Co., which trims trees for PG&E; and has a $9.6-million claim; the city of Palo Alto, which claims a $200-million debt; and Tennessee, which says PG&E; owes $76 million.
All are among the 100 largest unsecured creditors of PG&E;, which filed for Chapter 11 protection from creditors on Friday, declaring that the energy crisis had thrown the company $9 billion in debt.
Working over the weekend, the trustee’s staff sent faxes to the largest 100 creditors, asking if they wanted to serve on the creditors committee. Seventy-five responded affirmatively.
Not only was the acceptance rate extremely high, Stanley said, she was lobbied before the selection. “Today I am getting responses from the disappointed,” she said. “Usually people do not want to serve.”
The number of committee members is discretionary, although it has to be an odd number so there are no tie votes. Eleven is an unusually large number, Stanley said, adding that “there is nothing typical about this case.”
The company’s creditors touch many sectors of the nation’s economy, from Wall Street to vendors providing goods and services to the utility.
The committee members include companies that provided power but were not paid as PG&E;’s financial condition worsened--Enron Corp. ($580 million), Dynegy Power Marketing ($255 million), KES Kingsburg L.P. ($182 million) and GWF Power Systems ($62 million).
Also named to the committee were the Bank of New York ($2.2 billion), a group of banks headed by Bank of America ($1.175 billion), U.S. Bank ($310 million) and Merrill Lynch ($106 million).
The only trade creditor represented on the committee is employee-owned Davey Tree Expert Co. of Kent, Ohio. Chief Financial Officer David Adante said the company has trimmed brush and trees from around PG&E; power lines for more than 30 years and has 600 employees on the account.
“PG&E; has always been a good client for us, and we believe firmly that at the end of the day they are going to survive and continue to be a good client,” Adante said.
Tom Milne, who represents the state of Tennessee on the committee, said, “This has become a political issue here.”
The Tennessee Consolidated Retirement Fund, Milne said, holds $25 million in commercial paper from PG&E.; But the more politically volatile holding is the state general fund, which PG&E; owes $50 million.
“The taxpayers of the state of Tennessee are asking why we should subsidize the ratepayers of California,” Milne said. “Our rates have doubled or tripled here. Why should California be spared? We are hoping for a 100% return on our investment.”
Enron Corp. spokesman Mark Palmer said, “I think in being a part of the solution for restructuring we offer a unique perspective, and I think that’s why we were chosen as one of the members of the committee.”
He declined to discuss the company’s claim. “We don’t talk about specific credit exposures, but we have told our investors, Wall Street analysts and journalists that we have established adequate reserves,” he said, “and regardless of the situation in California, we will meet our earnings per share estimates of $1.70 to $1.75 for 2001.”
Stanley said the committee members must put aside their individual interests while they act as a fiduciary for unsecured creditors. To represent it in court, the panel will hire an attorney, to be paid for by PG&E.;
The committee is expected to be an important player as bankruptcy Judge Dennis Montali figures out who should be paid and how much as the utility reorganizes its financial affairs. “The judge will pay lots of attention to them,” Stanley said. “There are many creditors and many large creditors.”
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Times staff writer Rone Tempest in Sacramento contributed to this story.
