ML023180298

Supplemental Declaration of Paul S. Aronzon in Support of Motion of the Official Committee of Unsecured Creditors for Authority to Incur Plan Implementation Expenses

ML023180298
Person / Time
Site:	Diablo Canyon
Issue date:	11/05/2002
From:	Aronzon P Milbank, Tweed, Hadley & McCloy, LLP
To:	Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California
References
01-30923 DM, 94-0742640
Download: ML023180298 (8)

Text

1 PAUL S. ARONZON, SBN 88781 ROBERT JAY MOORE, SBN 77498 2 MICHAEL I. SOROCHINSKY, SBN 166708 MILBANK, TWEED, HADLEY & McCLOY LLP 3 601 South Figueroa Street, 3 0 th Floor Los Angeles, California 90017 4 Telephone: (213) 892-4000 Facsimile: (213) 629-5063' 5

Attorneys for Official Committee of Unsecured Creditors 6

7 8 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA 9 SAN FRANCISCO DIVISION 10 In re Case No. 01-30923 DM 11 PACIFIC GAS AND ELECTRIC COMPANY, Chapter 11 Case a California corporation, 12 Debtor. Date: November 8, 2002 13 Time: 1:30 p.m.

Place: 235 Pine Street, 2 2nd Floor, Federal I.D. No. 94-0742640 San Francisco, California 14 15 SUPPLEMENTAL DECLARATION OF PAUL S. ARONZON IN SUPPORT OF MOTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR 16 AUTHORITY TO INCUR PLAN IMPLEMENTATION EXPENSES 17 18 19 20 21 22 23 24 25 26 27 28 w4o/ i4a:(

LAI 46248541vl 11/5/02 12 02 PM Supplemental Declaration of Paul S. Aronzon in Support of Motion for Authority to Incur Expenses

I I, Paul S. Aronzon, declare:

2 1. I am a partner at Milbank, Tweed, Hadley & McCloy ("Milbank"),

3 counsel to the Official Committee of Unsecured Creditors (the "Committee") in the Pacific Gas 4 and Electric Company ("PG&E") chapter 11 bankruptcy case (the "Case"). I am one of the 5 partners at Milbank primarily responsible for the representation of the Committee in the Case. I 6 have personal knowledge of the facts set forth below, and if called upon, I could and would 7 testify competently with regard thereto. I make this declaration in further support of the Motion 8 of the Official Committee of Unsecured Creditors for Authority to Incur Plan Implementation 9 Expenses (the "Motion") filed October 29, 2002.

10 2. Attached as Exhibit "A" is a true and complete copy of a form of letter 11 from Standard and Poor's ("S&P") regarding cost and timing parameters in connection with the 12 indicative ratings letter from S&P with respect to the debt and equity securities that will be 13 issued under the Amended Plan of Reorganization filed by the Committee and the California 14 Public Utilities Commission if it is confirmed.

15 1declare under penalty of perjury under the laws of the United States of America 16 that the foregoing is true and correct.

17 Executed this 5d' day of vember, 20 2 at Los Angeles, California.

18 19 20 Paul S-. Aronzon 20 21 22 23 24 25 26 27 28 LAI #6248541vl 11/5/02 12 08 PM

-2 Supplemental Declaration of Paul S. Aronzon in Support of Motion for Authority to Incur Expenses

EXHIBIT "A" NOV-05-2002 15:5-3 S &P 2122088390 P.01/05 55 WaterStret Termee Srrekhka Floor 33 Director Ne, York NY10041-0003 ProductManagement Tel (212)438-7196 Corporate& Govrn-mm Sevices Fax (212) 438-7191 Standard & Poor's A Dimston of TheMcwHiW Comtpanies November 5, 2002 California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor C/O Milbank, Tweed, Hadley & MeCloy LLP Attn. Mr. Paul Aronzon 601 South Figueroa Street, 300 Floor Los Angeles, CA 90017

Dear Mr. Aronzon:

Thank you for your recent request for the Rating Evaluation Service from Standard & Poor's. The California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor have requested that we perform the evaluation detailed on Exhibit A attached hereto (the "Evaluation").

We agree to perform the Evaluation on the terms and conditions stated herein in the Exhibits and in accordance with the attached Terms and Conditions which are expressly incorporated herein. You agree to pay to Standard & Poor's the fee listed on Exhibit B attached hereto at the times described therein.

Please indicate your acceptance of this proposal for evaluation services and the attached Exhibits and Terms and Conditions by signing this document and returning it via fax to (212) 438-7191 and by mail to me.

Sincerely, c.c. Gary M. Cohen, California Public Utility Comninission Ronald Barone, Standard & Poor's California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor C/O Milbank, Tweed, Hadley & McCloy LLP By: Date:

(signature/date)

Name:

(print or type)

Title:

(print or type)

NOV--05-2002 15:5"3 S &P 2122088390 P.02/05 Standard & Poor's Exhibit (A)

Rating Evaluation Service (The Services To Be Performed)

The California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor will provide to Standard & Poor's in timely fashion:

• Signed engagement letter, a A detailed scenario pertaining to an alternative plan of reorganization for Pacific Gas and Electric Company to be evaluated (including relevant tax information),

• Pro-forma income, balance sheet and cash flow statements, a Other supportive documentation needed to make the rating evaluation.

Standard & Poor's will provide to the California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor in verbal and written format:

• A letter detailing definitive analysis of the impact of the scenario pertaining to an alternative plan of reorganization for Pacific Gas and Electric Company on initial ratings,

• An explanation of adjustments and assumptions used to derive prospective credit ratios and resulting ratings impact of the above scenario based on the information provided to us.

Services that Standard & Poor's will not perform:

• Providing commentary on matters of public policy.

a Analysis on hostile acquisition of a Standard & Poor's ratings client.

• Tax analysis of any proposal submitted.

a Assistance in formatting or formulating a proposal.

• Recommendation as to the type of debt/equity the company should sell.

• Analysis of proposals that are continuously reformatted by the company.

NOV-05-2002 15:54 S& P 2122088390 P.03/05 Standard& Poor's A VtXP1m4MThCAGmUWJ1ICOIlWiV Exhibit (B)

Rating Evaluation Service Fee Schedule As per our agreement, Standard & Poor's will perform the Services outlined in Exhibit A, for the California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor and will provide you with a rating letter explaining our conclusions. We estimate the fee for these services to be $250,000. However, the actual fee will be fled to the complexity, timeliness and form requested for the proposed analysis.

We will invoice you for $125,000 upon signing this agreement, with the balance ($125,000) due when the rating letter is issued. In the event the evaluation is not completed, the Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California corporation as debtor will be billed for work completed to date, with a minimum of $150,000.

Should you require any additional information about Standard & Poor's services please call us.

Notices: All notices shall be addressed as follows:

If to Standard & Poor's:

Mr. David Bodek Director Standard & Poor's 55 Water Street Floor 38 New York, NY 10041-0003 Phone: 212-438-7969 Fax: 212-438-2154 If to the California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor:

California Public Utilities Commission and Official Committee of Unsecured Creditors in the matter of Pacific Gas and Electric, a California Corporation as debtor C/O Milbank, Tweed, Hadley & McCloy LLP Attn. Mr. Paul Aronzon 601 South Figueroa Street, 3 0th Floor Los Angeles, CA 90017 Phone: 213-892-4377 Fax: 213-892-4777

NOV-05-2002 15:54 S &P- 2122088390 P.04/05 Standard& Poor's 1 Rating Evaluflln Service Terms and Condions I Sorvice. It is understood and agreed that () the evaluabon is being provded by Standard & Poor's Ratings Services (*Standard & Poor's) solely for the Clients internal use and may only be commrnicated to third parties who agree to be bound by the agreements as sat forth in paragraph 2. 0})the services are based solely on Information supplied to Standard & Poor's by Client and does not represent an audit or full review by Standard & Poor's, (*I) Standard & Poor's roles on the Clint and the CliMen accountantl, counsel and other experts for the a;c.eacy and complaternss oithe bformatlon prosnteld inconnection wi the services and undertakes no duty of due diligence or independent verificabon of arty such informadton, (lv) Standard & Poors does not and cannot guarantee the accuracy, imelinass or completness of information Wired to by Standard & Poor's in providing the service or the results obtained from use of the service, (v) Standard & Poor's is not actng as an investment or financlal advisor to the Clant Inconnection with provrdfag the serviCes and thie Client may not rely on Theinformatron provided by Standard & Poor's as investrient or financal advice, and (vi) nothing hr this Agreement creates. is intended to create or should be onostrued as creating a fiduciary rela*nshp between Standard & Poors and the Client It Is understood and agreed that Standard & Poor's saries may Include Informan that may appear to be edvice nd reconmendation, but all decisions inconnection with the Iplernentaton of any course of acron based on any such advice or recomvendation or other Service furnished by Standard &Poc"s shall be the saole responsibility o, *nd by, Client Intoe event of a deaim by e thid party relating to services under this AgreemnenL eientwillindemnity Standard & Poor's and its personnel from all such darin, liablibes, cost and expenses except to the extent determrned to have resulted from the gross negligence or willful misconduct of Standard &Poor's personnel.

itis understood end agreed that Standard & Pooes has not consented to and wit riot consent to beirg named an "exper" under applicable securities laws, including without limitation Section 7 of the Securities Act of 1933 ClIent may not use any written product produced by Standard & Poor's under this Agreement in any registraton statement Orother public iie 9 under any applicable taw

2. Lkhbtatlon on Dlsemnlnation. The Ctient agrees that It shail only coninunicata the evaluation services to third parties who execute end deriver to the Client end to Standard &Pooes a letter to ti effect that such third party (0)understands and agrees that Standard & PooAs has and assumes no duly toward such thrd party, (ii)agrees Pot to rely on the raling evaluation, (El)recerved a copy of the Terms and Conditons and understands the scope of the evaluetion services me the limitations thereof and (Qv)agrees not to communicale the ralings evaluabon service to any third party without the Client's consent end in compronce with thks paragraph, provded however that Client may share the evaluation rvieCs with Its financial and legal adviom without obtainrig the written acnowledgernent referred to Inthis sentence.

3 Terme. Unless terminated sooner Inaccordance with its terms, this Agreement shall terminate an the completon of serices hereunder. This Agreement may be lerninatod by either party at any bime by givng wdrlf' notice to the other party nor less than 30 calondar days before the effective date of termination.

4 Umi5on on Warrantis. THIS AGREEMENT IS AN EVALUATION SERVICES ENGAGEMENT. STANDARD & POOR'S WAIANTS THAT IT WILL PERFORM SERVICES HEREUNDER IN G000 FAITH. STANDARD & POOR'S DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABhLITY AND FITNESS FOR A PARTICULAR PURPOSE.

5. Limitatlon on Damaige. Client agrees that Standard & Pooes, its officers, directors, shareholders end employees shall not be liable to Client for any actions, damages, claims, Iiabilibes, costs, expenses. or losses in any way ansing out of or releatng to the servic performed hereunder for an aggregate amount in excess of the aggregate fees paid by C.ent to Standard & Poor's under this Agreement In no event shall Standard &

Poor's. its otTicers, diroecors, shareholders or employees be liable for consequential, special, IndimrL incidental, punitive or exemplary damages, cost, expenses, legal fees, or losses (including, without limtation, los proits end opportunity costs) In furdtra2no and rot In Furtabon of the foragoing, Standard &Poor's wll not be liable in respect of any decisions made by Client as a result of the performance by Standard & Poor's of its services hereunder or based on anything that appears to be advice or recommendations fumished to Clent hereunder. The provisions of this Paragraph shal apply regardless of the form of action, damage, claim, iabity, costs, expenses or loss, whether in conract, statute, tort (icduding, without limitation, neglgence), or otherwise. Standard &Poor's does no warve any prutecions or defenses it may have under law, includilng but not limited to, the First Amendment of the Constilubon of the United States ofAmence.

6. Cooperation. Client shall cooperate with Standard & Po's in the performance by Standard & Pooer's of its services hereunder, including, without imnitatior,providing Standard & Poor's with timely access to all data and Information relevant to the performance of the services and to personnel of Clent Client shall be responsible for the performance of its employees and agent and for the accuracy and completeness of anldata and hIformation provided to Standard & Poor's for purposes of the performance by Standard &Poor's of its servces.

7. Farce Mfilaleurs. Neither Client nor Standard & Por's shall be Grable for any delays resultng from cecumstance's or causes beyond its reasonable control, lincWg, without mnilalion, fire or other casualty, act of God, strie or labor dispute, war or other violence, or any law, order or requirement of any governmenU agency Orauthority,

8. Lknltzation of Actions. No action, ragardless of form, arising under or rating to this AgreemnenL may be brought by either pary mre than one year str the cause of actions has accrued, except that an acton for non-payment may be brought by Standard & Poor's not later than one year following the date of the last payment due to Standard &Pcoors hereunder.

9 Independent Conractor. itis undeood and agreed that each of the pares hereto is an indpendnt cntracor and that neither party ir. no shall be considered to be, an agent fiduciary, dstrIbutor ra representative of the other. Neither party shall act or represent itelf, directly or by impllcaflon, as an agent of the other or in any manner assuirie or create any obifgation on behalf of, or in the name of, the other.

NOV-05-2002 15:55 sa&pF 2122088390 P.05/05 Standard & Poor's g A DwminqflwAtGmrl C-Pvýn

10. Coodhialltym . Client end Standard &P~ci' acknowledge and agree that all informaittio communicated to either Client or Standard & Poor's by tie other party in wc~ocn wit the peitrinanca by a party under this Agreement &alfObe received in confidence, shall be used only for purposes of this Agreemenit. and niosuch corlfidantlhl informnation shall be dadosed by the respective parties or ther agents or personnel without tie prior written consent ofthe other party No~twdtaindkmg the foregoing Client agrees that inithe event auchinfrmmation, Ismaterial to the rating, such rifonnation may be used to raise, lowe, suspend, withdraw, place cii CreditWatch and change the Outlook assigned to any such rating and such changed rating may beconimuntatod to the public. Except to tie extent otherwise required by applicable law, the parWis obligations under this section do riot apply to information that, (a)Isor becomes generally available to the public other than as a result of diadoclur by Client or Standard

& Poors, (b)was knowni toeither Client or Standard &Poor' or had been pirevously possessed by Clien or Standard 9 Poors without restrctkin against disclosure at the Urns Ofrecept thereof byClient or Standard &Focis, (c)was independently developed by Client or Standard &Poor's without violation of this Agreement, or {d) Clieint and Standard &Poets agree from tine to tI= to disclose.

Each party shIl be doomed to hawveint its nonirsidlosure obligations under this Sectionm as long as itexercises thesame lava! of care to protect the othei'a information as Itexercises to protect Itsown conulkiential information, Standard &Peers may retain, subject tothe termse of this Section, cqses of Clients confidential infonnatioun required for complnance with internal police.

11. SurvivraL The provisions of Paragraphs 1.2.4,5, 8,9, 10,11, 12 end 14 hereof shiall survive the expiration or termination of this Agreement.

12. Assgignment. Except as provied below, neither party mauy assign, transfer or delegate any of the rights or obligations hereunder withiout the prior written consent of tie other party. Standard &Poor's may assigns ftsrights and obligaboion hevreuder to aniy affiliate that is a successor in or bustiness of Standard &Poor's practice, without the consent of Client interest to atfor subtantialaly allof the a~soset

13. Smnabllty inthe event that any lerm or provison of this Agreement shall be held to Weinvald, vold or unienforceable. then Mhe remiainder of OhilsAgreement shalt not be affected, Imipaired or invalidated, and each sudh term end provision of this Agreement shall bevalid and enforceable to the fullest extaritpertt bylaw 14 Entire Agrooeault. These terms, and the Proposal or Engagerment letter to which these tows are appended. kidcudirig Exhibits (t~ogeher the

'Agremenar') constiute the andre agreement between Standard &Poor's and Gliant with respect to the sub~ed matter hereof and supersede all other ordal ed written representallor. understanidings or agreements relatinig to tie subject matter hereof This Agreement may not be changed, amended or modified except ina wribmn signed by autionzed represientaitirves of both pAte

15. NotICe, Atl notices or other conunuuicafloiis under this Agreectentatiall be inwriting and shall be deemied give upaon receipt by hand delver, mal, overniight delivery telecopy or other electronic means capable of producing awritten record, addressed at the addresses sat forth Inthe agreenieri TflTAI P. M