PG&E Corp., the California power giant that sought bankruptcy protection because of $30 billion in possible wildfire liabilities, is nearing a deal with a group of investors that includes naming Bill Johnson as chief executive and overhauling its board, according to people familiar with the matter.
PG&E is nearing an agreement with the group — consisting of Knighthead Capital Management, Redwood Capital Management and Abrams Capital Management — to hire Johnson, the outgoing CEO of the Tennessee Valley Authority, a federally operated power agency, said the people, who asked not to be identified because the matter was private.
The deal, which would also keep three current directors and nominate 10 others for the board, could be announced as soon as Wednesday, the people said.
Johnson would be appointed to the board at a later date subject to a shareholder vote, they said. They said that although an agreement is close, no final deal has been reached and talks may still fall apart.
A representative for PG&E — which owns Pacific Gas & Electric Co. — said the San Francisco company doesn’t comment on market rumors or speculation. A representative for the investor group declined to comment.
Tennessee Valley Authority spokesman Jim Hopson said his agency isn’t aware of Johnson’s plans after he leaves. Johnson didn’t have an immediate comment, Hopson said.
PG&E, whose shares have fallen 62% since October, dropped 35 cents, or 1.9%, to $17.66 on Tuesday.
The appointments follow an intense, weeks-long battle over who will lead PG&E out of the biggest utility bankruptcy in U.S. history.
The three shareholders, which collectively own almost 10% of PG&E, disclosed their plans to push for changes at the company last month. They have squared off against activist investor BlueMountain Capital Management, which put forth its own slate of 13 directors. Even Gov. Gavin Newsom joined the fight, urging the company to resist hedge fund picks and appoint local directors.
BlueMountain’s nominees include former California Treasurer Phil Angelides, former National Transportation Safety Board Chairman Christopher Hart and Jeff Ubben, CEO of activist investor ValueAct Capital Management. It’s unclear whether the firm will push ahead with its proxy fight despite PG&E’s agreement with the other group.
The new board will have to guide PG&E through what’s already a contentious reorganization as shareholders, creditors, wildfire victims and California officials grapple with restructuring a utility serving 16 million people in one of the world’s largest economies.
PG&E filed for Chapter 11 bankruptcy in January, facing tens of billions of dollars in liabilities tied to wildfires that its equipment may have caused. The company promised a board overhaul as its power lines were investigated for evidence of whether they started the deadliest wildfire in California history, which killed 85 people last year.
Johnson would succeed Geisha Williams, who resigned as PG&E’s CEO days before the bankruptcy filing.
Newsom earlier criticized PG&E’s plans to revamp its board with what he described as “hedge fund financiers, out-of-state executives and others with little or no experience in California and inadequate expertise in utility operations, regulation and safety.” He urged the company to consider a board made up primarily of Californians.
The idea of making Johnson CEO has already drawn some opposition.
Clean energy advocacy group Vote Solar said his track record “falls far short of the kind of commitment to promoting a culture of safety and clean energy progress that PG&E’s customers deserve.” The group pointed to the lack of solar and wind power on TVA’s coal-dependent system and said the utility “makes it hard for customers to go solar.”