ML030350593
| ML030350593 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 01/24/2003 |
| From: | Hulse W Official Committee of Unsecured Creditors, UBS Warburg |
| To: | Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California |
| References | |
| 01-30923, 94-07420640 | |
| Download: ML030350593 (35) | |
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, 300 Floor Los Angeles, California 90017 4 Telephone: (213) 892-4000 Facsimile: (213) 629-5063 5
6 Attorneys for Official Committee of Unsecured Creditors 7
8 UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN FRANCISCO DIVISION 11 In re Case No. SF 01-30923 DM 12 PACIFIC GAS AND ELECTRIC Chapter 11 Case COMPANY, a California corporation, 13 DECLARATION OF WALTER S. HULSE, Debtor. III IN SUPPORT OF APPLICATION OF 14 THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR ORDER 15 Federal I.D. No. 94-0742640 (1) AUTHORIZING EXPANSION OF SERVICES TO BE RENDERED BY UBS 16 *WARBURG LLC; (2) APPROVING THE SENIOR UNSECURED BRIDGE 17 FACILITY; AND (3) AUTHORIZING PAYMENT OF UNSECURED BRIDGE 18 FACILITY FEES Hearing:
19 20 Date: March 14, 2003 Time: 1:30 p.m.
21 Place: 235 Pine Street, 2 2 nd Floor San Francisco, California 22 23 24 25 26 27 28 LAl:#6253652v3 Declaration Of Walter S. Hulse
1 DECLARATION OF WALTER S. HULSE, IIH IN SUPPORT OF APPLICATION OF THE OFFICIAL COMMITTEE OF 2 UNSECURED CREDITORS FOR ORDER (1) AUTHORIZING EXPANSION OF SERVICES TO BE RENDERED BY UBS WARBURG 3 LLC; (2) APPROVING THE SENIOR UNSECURED BRIDGE FACILITY; AND (3) AUTHORIZING PAYMENT OF UNSECURED BRIDGE 4 FACILITY FEES 5
6 Walter S. Hulse, III, being duly sworn to oath, deposes and says:
7 1. 1 am a Managing Director of UBS Warburg LLC, a leading U.S.
8 investment bank ("UBS Warburg" or "UBSW"). I am Global Head of Power in the Energy and 9 Power Group, which is part of the Investment Banking Department at UBS Warburg. I have 10 personal knowledge of the facts stated herein except as to matters stated upon information and 11 belief, and as to those matters, I believe them to be true. If called upon to testify, I could and 12 would competently do so.
13 2. UBS Warburg has been retained to provide services as financing and 14 capital market arranger by the California Public Utilities Commission (the "Commission") and 15 Official Committee of Unsecured Creditors (the "Committee" or the "OCC") in connection with 16 their joint plan, now as amended the Commission's and Committee's Third Amended Plan of 17 Reorganization Under Chapter 11 of the Bankruptcy Code for Pacific Gas and Electric Company 18 dated November 6, 2002 (the "Joint Plan"). The terms of UBS Warburg's retention by the OCC 19 and the Commission were set forth in the October 2, 2002 engagement letter (the "Engagement 20 Letter") signed by UBS Warburg, the OCC, and the Commission. The Bankruptcy Court 21 authorized UBS Warburg's retention by the OCC and the Commission under the Engagement 22 Letter in the October 30, 2002 Order Granting Application of Official Committee of Unsecured 23 Creditors and California Public Utilities Commission for Order Authorizing Retention and 24 Employment of UBS Warburg LLC as Financing and Capital Markets Arranger ("UBS 25 Retention Order"). Through the UBS Retention Order, the Court approved the payment of the 26 retainer fees provided for in the Engagement Letter (the "Retainer Fees'), including monthly fees 27 and reimbursement of expenses. The UBS Retention Order further provides that any additional 28 fees or arrangements between the OCC and UBS Warburg are subject to a subsequent LA11:6253652v3 Declaration Of Walter S. Hulse Page 2
1 application and order of the Court. One of the additional arrangements delineated in the 2 Engagement Letter is to arrange for a commitment with respect to all or a portion of the 3 securities to be issued under the Joint Plan and to authorize the payment of commitment fees 4 commensurate with the scope of the commitment. I submit this Declaration in support of such 5 application.
6 3. I am authorized to execute this declaration in support of the Application 7 (the "Application") of the Committee in the Pacific Gas and Electric Company ("PG&E" or the to be 8 "Debtor") bankruptcy case (the "Case") for an order: (a) authorizing expansion of services 9 rendered by UBS Warburg; (b) approving the terms of the Senior Unsecured Bridge Facility 10 ("Facility") as described in the Bridge Facility Agreement ("Facility Agreement") (including the 11 Summary of Principal Terms and Conditions ("Summary") attached as Annex I thereto, the and 12 Bridge Facility Commitment Letter ("Commitment Letter") attached as Exhibit "A" thereto, the 13 Bridge Facility Fee Letter ("Fee Letter,") attached as Exhibit "B" thereto; collectively, 14 "Facility Documents"); and (c) authorizing payment of the fees set forth in the Fee Letter 15 ("Facility Fees') by the PG&E estate.
16 4. A true and correct copy of the Facility Agreement, including true and 17 correct copies of the exhibits and Annex thereto, which together comprise the Facility in 18 Documents, is attached as Exhibit "A" to this Declaration. The Facility Documents describe 19 detail the nature of theFacility, the requested commitment to provide the Facility, the roles of 20 UBS Warburg and UBS AG, Stamford Branch ("UBS AG") (together, "UBS") in connection 21 with the Facility, as well as the Facility Fees to be paid in connection with the Facility.
22 5. Specifically, pursuant to the Facility Agreement to be entered into by and into by 23 among the OCC and the Commission and UBS, and the Commitment Letter to be entered of 24 and among UBS and PG&E, UBS AG will commit to provide PG&E with the entire amount Letter, the 25 the Facility upon the terms and subject to the conditions specified in the Commitment to 26 Summary and the Fee Letter. The Fee Letter, in turn, specifies the fees to be paid with respect the 27 the commitment to provide, and eventual funding of, the Facility. The Summary specifies 28 LAI1:625365203 Declaration Of Walter S. Hulse Page 3
1 salient terms of the proposed Facility. The Facility Documents are hereby incorporated herein 2 by reference.
3 6. On November 15, 2002, UBS Warburg delivered to the OCC a Highly 4 Confident Letter described in section 2(b) of the Engagement Letter. In the Highly Confident 5 Letter, UBS Warburg stated that it was highly confident in its ability to arrange an aggregate of 6 $10.7 billion of financing in the form of the securities and credit facilities proposed under the 7 Joint Plan. Nevertheless, to help to ensure that all creditors are paid in full, the OCC requested 8 that UBS Warburg arrange with UBS' Global Syndicated Finance Commitment Committee for 9 UBS AG to backstop the sale of the Senior Notes and Preferred Stock' by issuing a commitment 10 in the amount of $1.5 billion in the form of the Facility described in the Facility Documents.
11 Through the Facility and under the terms of the Facility Documents, UBS AG has agreed to 12 backstop the issuance of up to $1.5 billion in Senior Notes and Preferred Stock under the Joint 13 Plan.
14 7. The fees to be paid, as set forth more fully in the Facility Documents, in 15 connection with the Facility are as follows:
16 a. Delivery Fee: One percent (1%) of the committed amount of 17 the Facility ($15 million), payable upon the execution and 18 delivery of the Commitment Letter, following entry of the order 19 granting the application.
20 b. Acceptance Fee: One percent (1%) of the committed amount of 21 the Facility ($15 million), payable upon PG&E's execution of 22 the Commitment Letter pursuant to an order of this Court.
23 c. Ticking Fee: One half of one percent (0.5%) accruing from the 24 date of the delivery of the Commitment Letter until funding of 25 the Facility or termination or expiration of the Commitment 26 Letter (approximately $625,000 per month), whichever is 27 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them 28 in the Commitment Letter.
LA1 :#6253652v3 Declaration Of Walter S. Hulse Page 4
1 earlier. The amount of the Ticking Fee shall be reduced by the 2 amount of the Acceptance Fee actually paid. The Ticking Fee 3 shall be payable on the closing date of the Facility or 4 termination or expiration of the Commitment Letter, whichever 5 is earlier.
6 d. Funding Fee: One percent (1%) of the actual funded amount 7 ($0 to $15 million), payable on the date of funding of the 8 Facility, if required.
9 e. Conversion Fee: Three percent (3%) of the principal amount of 10 the Facility on the Maturity Date 2 or the date on which the 11 Facility is refinanced.
12 8. The Facility Fees are consistent with UBS's normal and customary 13 compensation for transactional work and commitments of this type. UBS Warburg believes that 14 the Facility Fees are market-based, reasonable and reflect the nature, complexity and size of the 15 Facility transaction. The ability of UBS Warburg to arrange the Facility, and the economic terms 16 set forth in the Fee Letter, are based on current market conditions. Accordingly, it is a condition 17 to UBS's willingness to provide the Facility on the terms described in the Facility Documents 18 that the Court enter an order of approval on or before March 15, 2003.
19 9. UBS has not shared or agreed to share any of its compensation with any 20 other person, other than a managing director, professional or employee of UBS. UBS Warburg 21 has the right to syndicate the Facility and allocate portions of the Facility Fees as part of the 22 syndication to the syndication parties. Pursuant to the UBS Retention Order, UBS Warburg has 23 been paid $2 million in Retainer Fees from the PG&E estate pursuant to paragraph 2(a)(i) of the 24 Engagement Letter. Subsequent to the November 15, 2002 delivery by UBS Warburg to the 25 OCC of the Highly Confident Letter, UBS Warburg received an additional $6 million in Retainer 26 27 28 2 As that term is defined in the Facility Documents.
LAI :6253652v3 Declaration Of Walter S. Hulse Page 5
Milbank Tweed LA 1/24/03 10:46 PAGE 7/7 RightFAX 1 Fees from the PG&E estate pursuant to piregraph 2(a)(iii) of the Engagement Letter. UBS 2 Warburg hap not received any other componsation fom the PG&E estate.
3 10. UBS maintains and will continue to maintain "infbrrntion barrier;"
4 between those of its group which are providing or will provide services to the Committee and the 5 Commission and other areas oftJS.
6 I derlare under penalty of pejury that the foregoing is true and correct, Executed 44 7 thiszl day of January, 2003, 8
9 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 T00 'd LUZ9..A. IN"t'. M 131'.
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Exhl*bl'*t "A" Draft of 1/21/03 UBS AG UBS WARBURG LLC Stamford Branch 299 Park Avenue 677 Washington Blvd. New York, New York 10171 Stamford, Connecticut 06901
[___,2003)*
California Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94111 Attn: Gary M. Cohen General Counsel Official Unsecured Creditors Committee Appointed in the PG&E Chapter 11 Case c/o Milbank, Tweed, Hadley & McCloy LLP 601 S. Figueroa Street, 3 0t" Floor Los Angeles, CA 90017 Attn: Paul S. Aronzon Re: Bridge Facility Agreement Ladies and Gentlemen:
UBS Warburg LLC ("UBSW") is acting as financing and capital markets an-anger for the California Public Utilities Commission ("CPUC") and the Official Unsecured Creditors Committee ("OCC") (collectively, "you" or the "Proponents"), in "connection with the financing of the Third Amended Chapter 11 Plan of Reorganization filed by the Proponents, as amended to the date hereof (the "'Plan"),for Pacific Gas and Electric Company (the "Borrower" or the "Company")) in its Chapter 11 case. UBSW and the Proponents have entered into an engagement agreement dated October 2, 2002 (the "Engagement Agreement"), which has been approved by the United States Bankruptcy Court for the Northern District of California (the "Bankruptcy Court")
pursuant to an order of the Bankruptcy Court dated October 30, 2002 (the "Engagement Order"). This Agreement is being delivered at the request of the Proponents, and with the approval of the Bankruptcy Court, pursuant to Section 2(c) of the Engagement Agreement.
Under the Plan, the Company would be refinanced as an integrated utility. Cash payments to creditors under the Plan will be approximately $12.173 billion and additional claims will be either reinstated or reorganized into approximately $545 million of debt "To be effective, this Agreement must be approved by the Bankruptcy Court on or before March 15, 2003, and then executed and delivered by the Proponents within 5 days thereafter.
12/16/02 9"34 AM
Commitment Letter 2 ,2003 and $432 million of preferred stock of the Company. Funds to provide the cash payments to creditors will include approximately (i) $5.8 billion of first mortgage bonds (the "First Mortgage Bonds"); (ii) $1.5 billion of senior secured credit facilities (the "Term Credit Facility"); (iii) an aggregate of $1.5 billion of senior unsecured notes (the "Senior Notes") and preferred stock or preferred securities (the "Preferred Stock") of the Company or, in the event the Senior Notes or Preferred Stock are not issued at the time the Transactions are consummated, borrowings by the Company of up to $1.5 billion under a senior unsecured credit facility (the "Bridge Facility") as described in the Summary of Principal Terms and Conditions attached hereto as Annex I and the Bridge Facility Commitment Letter (the "Commitment Letter") in the form attached as Exhibit A to this Agreement (the "Bridge Facility Term Sheet"); and (iv) approximately $3.4 billion of cash available at the Company. In addition, the reorganized Company would have available up to $1.9 billion in facilities from a combination of (i) a senior secured revolving credit facility (the "Revolving Credit Facility") and (ii) a securitization of accounts receivable of the Company (the "Receivables Facility"). The First Mortgage Bonds, Senior Notes, Preferred Stock and Receivables Facility are referred to herein collectively as the "Securities" and the Term Credit Facility and the Revolving Credit Facility are referred to herein collectively as the "Credit Facilities." We have previously delivered to you, as attachments to our "highly confident" letter dated November 15, 2002 (the "Highly Confident Letter"), term sheets summarizing the anticipated terms of the Securities and the Credit Facilities at that date. As used herein, the term "Transactions" means the reorganization of the Company in accordance with the terms of the Plan to occur on the effective date of the Plan, including, without limitation, the issuance and sale of the Securities and the execution and delivery of and initial borrowings under the Credit Facilities and execution and delivery of the Reorganization Agreement between the CPUC and the Company contemplated by the Plan.
Commitments You have requested that UBS AG, Stamford Branch ("UBS") commit to provide the Bridge Facility and that UBSW agree to structure, arrange and syndicate the Bridge Facility. UBS is pleased to advise you of its commitment to provide the entire amount of the Bridge Facility to the Borrower upon the terms and subject to the conditions set forth or referred to in the Commitment Letter, the Bridge Facility Term Sheet and the Bridge Facility Fee Letter (the "Bridge Facility Fee Letter") attached as Exhibit B to this Agreement.
Subject to the conditions set forth herein UBS and UBSW agree to execute and deliver to the Company, the Commitment Letter and the Bridge Facility Fee Letter upon (i) entry on or prior to March 15, 2003 of an order by the Bankruptcy Court in form and substance satisfactory to UBSW, UBS and their counsel authorizing the Company's payment of the fees referred to in the Bridge Facility Fee Letter and the payment to UBSW of the expenses set forth in the Commitment Letter and the Bridge Facility Fee Letter (the "Approval Order") and (ii) the concurrent payment by the Company of the Delivery Fee.
Conditions 12/16/02 9"34 AM
Commiritment L.etter 3 2003 The commitment of UBS and UBSW to execute and to deliver and perform their respective obligations under the Commitment Letter and Bridge Facility Fee Letter with respect to the Bridge Facility may be terminated by UBS upon written notice to you if:
(i) the terms of the Transactions described herein or in the Commitment Letter, Bridge Facility Term Sheet, or the terms of the Plan as filed with the Bankruptcy Court are changed in any respect determined by UBSW to be material; (ii) any of the fees provided for herein or in the Bridge Facility Term Sheet, the Bridge Facility Fee Letter or the Engagement Agreement are not paid when due; (iii) the Plan is not confirmed by the Bankruptcy Court on or prior to June 15, 2003 pursuant to a confirmation order in form and substance reasonably satisfactory to UBS; (iv) the confirmation by the Bankruptcy Court of a plan of reorganization other than the Plan (as amended or modified with the consent of UBS), or the withdrawal of the Plan by the Proponents, or the entry of an order by the Bankruptcy Court denying confirmation of the Plan; (v) any event or condition has occurred or exists that would permit UBS to terminate the Commitment Letter;, (vi) the Engagement Order or the Approval Order is reversed, vacated, stayed or modified in any respect; or (vii) each Plan Proponent has not executed and delivered this Agreement within five days of the date hereof.
Governing Law, Etc.
This Agreement shall not be assignable by you without the prior written consent of UBSW, and any purported assignment without such consent shall be void. This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by UBS, UBSW and, each of the Proponents.
This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement.
Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Agreement. Headings are for convenience only. This Agreement is intended to be for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. This Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of law. Any right to trial by jury with respect to any claim or action arising out of this Agreement is hereby waived.
Except where jurisdiction properly lies with the Bankruptcy Court, each Proponent hereby submits to the non-exclusive jurisdiction of the federal and New York State courts located in The City of New York (and appellate courts thereof) in connection with any dispute related to this Agreement or any of the matters contemplated hereby, and agree that service of any process, summons, notice or documents by registered mail addressed to it shall be effective service of process against it for any suit, action or proceeding relating to any such dispute. Each Proponent irrevocably and unconditionally waives any objection to the laying of such venue for any suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts to whose jurisdiction such party is or may be subject by suit upon judgment.
12/16/02 9:34 AM
Commitment Letter 4 ,2003
[Signature Page Follows]
12/16102 9:34 AM
Commitment Letter 5 2003 UBS and UBSW are pleased to have been given the opportunity to assist you in connection with the financing of the Plan. Please indicate your acceptance of the terms hereof by returning to us executed counterparts of this Agreement.
Very truly yours, UBS WARBURG LLC UBS AG, STAMFORD BRANCH By: By:
Name: Name:
Title:
Title:
By: By:
Name: Name:
Title:
Tide:
Accepted and agreed to:
CALIFORNIA PUBLIC UTILITIES COMMISSION By:,
Name: Gary M. Cohen
Title:
General Counsel OFFICIAL UNSECURED CREDITORS COMMITTEE APPOINTED IN THE PG&E CHAPTER II CASE c/o Milbank, Tweed, Hadley & McCloy LLP
-J Name: Paul S. Aronzon
Title:
Partner 12/16/02 9:34 AM
ANNEX I ANNEX I Summary of Principal Terms and Conditions Capitalized terms used and not defined herein shall have the meanings provided in the Commitment Letter to which this term sheet is attached.
BORROWER Pacific Gas & Electric Company (the "Company")
FACILITY: Senior Unsecured Bridge Facility (the "Facility")
AMOUNT: Up to $1.5 billion ARRANGER: UBS Warburg LLC ("UBSW")
ADMINISTRATIVE AGENT: UBS AG, Stamford Branch (the "Administrative Agent")
LENDERS: A syndicate of banks, financial institutions and other entities, including UBS AG, Stamford Branch, arranged by the Arranger.
RANK: The loans under the Facility will be senior unsecured indebtedness of the Company and will rank senior to all subordinated indebtedness.
GUARANTEES: The Facility will be guaranteed by all of the Borrower's existing Subsidiaries, if any. In addition, any newly or created Subsidiaries will also be required to guarantee the Facility. The guarantees will be unsecured, unsubordinated obligations of the Guarantors.
USE OF PROCEEDS: Proceeds from the borrowings under the Facility (the "Initial Loans")
will be used to fund a portion of the cash payments to creditors of the Company under the Third Amended Plan of Reorganization (the "Plan") filed by the California Public Utilities Commission ("CPUC")
and the Official Unsecured Creditors Committee ("OCC" and collectively, the "Proponents") in lieu of the Senior Notes and Preferred Stock described therein.
MATURITY/EXCHANGE: The Facility will mature (the "Maturity Date") on the earlier of (i) the date that is 364 days after the Funding Date or (ii) the closing date of refinancing of the Initial Loans. If the Borrower has failed to raise Take-Out Financing (as defined below) by the date set forth in (i), the amount of Initial Loans outstanding under the Facility will be exchanged, at the option of the Lenders, for notes (the "Exchange Notes") having terms comparable to the Senior Notes contemplated by the Highly Confident Letter. If a Lender chooses not to receive Exchange Notes for its Initial Loans, such Initial Loans shall be converted into a term loan (each, a "Term Loan") maturing on the tenth anniversary of the Funding Date.
abed
FUNDING: The Company may borrow the full amount of the Facility in a single drawing on the closing date upon satisfaction of all the conditions precedent to Borrowing to be specified in the Facility documentation.
CONDITIONS TO BORROWING: Usual and customary for facilities and transactions of this type, including those set forth in the Commitment Letter and will include, but not be limited to the following:
(i) Borrower shall have received gross proceeds of at least $7.3 billion from the issuance of Securities (other than the Senior Notes and Preferred Stock) and borrowings under the Term Credit Facility and have available to it commitments totaling
$1.9 billion from the Revolving Credit Facility and Receivables Facility.
(ii) The Arranger shall be satisfied that the cost of the Facility and any Take-Out Financing will be deemed prudent and recoverable in rates pursuant to the Reorganization Agreement.
(iii) The Plan will have been confirmed by the Bankruptcy Court, pursuant to a confirmation order satisfactory to UBSW and the Plan (with such changes as may have been approved by UBSW) become effective following the resolution of any appeal in a manner satisfactory to UBSW.
(iv) UBSW's business, financial, legal and accounting due diligence relating to the Borrower shall have been completed (and the results thereof shall be satisfactory to UBSW and UBSW shall be satisfied that after giving effect to the reorganization of the Borrower, the Borrower's revenues will be sufficient to meet in full its obligations under the Securities and Credit Facilities ) and there shall have occurred no change, or the disclosure of any additional information to, or discovery of additional information by, UBSW, that UBSW deems to be materially adverse in respect of the business, results of operations, condition (financial or otherwise), assets, liabilities or prospects of the Borrower.
(v) Execution and delivery of definitive documentation for the Facility satisfactory to UBSW and the accuracy of all representations and warranties contained therein.
(vi) There not having occurred, in the judgment of UBSW, a material adverse change or material disruption in the financial, banking or capital markets generally after the date of this letter (including, without limitation, the markets for loans to or unsecured debt securities or preferred stock issued by companies similar to the Borrower that could reasonably be expected to have a material adverse effect on the syndication of the Facility or the marketing of the Take-Out Financing.
(vii) Borrower shall have engaged an investment bank (the abcd 2
"Investment Bank") reasonably satisfactory to the Arranger to place the Take-Out Financing, the proceeds of which will be used to prepay in whole or in part borrowings under the Facility.
At least 30 business days prior to the Closing Date (or such longer period as may be deemed necessary by the Investment Bank), Borrower shall have prepared and delivered to the Investment Bank an offering memorandum or prospectus relating to the offer of the Take-Out Financing in the form contemplated "Refinancing of Initial Loans", and the Investment Bank shall have marketed the Take-Out Financing pursuant to such offering memorandum or prospectus for such a period as is customary to complete the sale of securities such as the Take-Out Financing.
- viii) Other customary closing conditions for similar transactions INTEREST RATE: Prior to the Maturity Date, the Initial Loans will accrue interest at a rate per annum equal to one month Adjusted LIBOR as determined by UBS plus the Applicable Spread.
The Applicable Spread will be set on the Funding Date. The Applicable Spread will increase by 50 basis points at the end of each three-month period thereafter. Interest on the Initial Loans will be payable in arrears at the end of each three-month period and at the Maturity Date. Interest on the Initial Loans will not exceed at any time a rate to be determined, and to the extent the interest payable on the Initial Loans exceeds a rate to be determined, the Borrower may, at its option, cause such excess interest to be added to the principal amount of the Initial Loans.
FEES: Delivery, acceptance, funding, conversion, take-out and ticking fees in respect of the Facility payable in cash pursuant to the Commitment Letter.
REFINANCING OF INITIAL The Borrower shall agree to use its best efforts to (i) prepare an LOANS: offering memorandum for a private placement through resale pursuant to Rule 144A or (ii) file a registration statement under the Securities Act with respect to Senior Notes or Preferred Stock (each an "Offering") to refinance in full the Initial Loans (the "Take-Out Financing") and to consummate such Offering as soon as practicable thereafter in an amount sufficient to repay the Initial Loans. Each Offering shall be on such terms and conditions as the Investment Bank effecting such Offering in its judgment determines to be appropriate in light of prevailing circumstances and market conditions and the financial condition and prospects of the Borrower and its affiliates at the time of the Offering.
In connection with each Offering, Borrower shall prepare and deliver to the Investment Bank an offering memorandum or prospectus relating to the issuance of the Take-Out Financing, in form and substance satisfactory to the Investment Bank (which offering memorandum or prospectus shall contain audited, unaudited and pro forma financial statements meeting the requirements of abcd 3
Regulation S-X under the Securities Act of 1933, and otherwise satisfactory to the Investment Bank, for the periods required of a registrant on Form S-I). Borrower shall provide, or cause to be provided, to the Investment Bank all assistance reasonably requested by the Investment Bank to market the Take-Out Financing, including, without limitation, assisting in preparation of road show materials and making senior management of Borrower and its subsidiaries available to participate in meetings with prospective investors in a "road show."
MANDATORY PREPAYMENTS: So long as no event of default under any senior secured indebtedness has occurred and is continuing, the Initial Loans (and, if issued, Exchange Notes, to the extent required by the terms thereof) on a pro rata basis, at par plus accrued and unpaid interest, will be required to be prepaid by the Borrower with:
(i) 100% of the net proceeds of the issuance or incurrence of debt (other than senior secured borrowings)
(ii) 100% of the net proceeds of asset sales (subject to exceptions to be mutually agreed upon)
(iii) 100% of the net proceeds from any issuance of equity securities OPTIONAL PREPAYMENTS: The Initial Loans may be prepaid, at the option of the Borrower, at any time upon ten days' prior notice, in whole or in part, without premium or penalty (except breakage costs).
REPRESENTATIONS AND Usual and customary for facilities and transactions ofthis type.
WARRANTIES:
AFFIRMATIVE COVENANTS: Usual and customary for facilities and transactions of this type.
NEGATIVE COVENANTS: Usual and customary for facilities and transactions of this type, including but not limited to:
(i) Limitations on dividends on, and redemptions and repurchases of, capital stock and other restricted payments (ii) Limitations on prepayments, redemptions or repurchases of pari passu and subordinated debt (iii) Limitations on liens and sale-leaseback transactions (iv) Limitations on loans and investments (v) Limitations on indebtedness (including guarantees and other contingent obligations)
(vi) Limitations on mergers, acquisitions and asset sales (vii) Umitations on transactions with affiliates
- viii) Limitations on dividend and other restrictions affecting subsidiaries (ix) Limitations on issuance of subsidiary capital stock (x) Limitations on changes in business and ownership abcd 4
(xi) Limitations on modification or waiver of debt and other material agreements (xii) Limitations 6n capital expenditures (xiii) Limitation on operating leases xiv) Certain financial covenants to be determined (xv) No change to fiscal year EVENTS OF DEFAULT: Usual and customary for facilities and transactions of this type, including but not limited to:
(i) Nonpayment of principal, interest fees or letter of credit reimbursement obligations (ii) Breach of covenants (iii) Breach of representations and warranties (iv) Cross payment default (v) Cross acceleration (vi) Bankruptcy (vii) Material judgments
- viii) ERISA (ix) Change of ownership or control Each Lender may assign all or a portion of its Loans and ASSIGNMENTS AND commitments under the Facility, or sell participations therein, to PARTICIPATIONS another person or persons, provided that each such assignment shall be in minimum amounts to be agreed upon (or the remainder of such Lender's loans and commitments, if less) and shall be subject to certain conditions (including, without limitation, the consent of the Administrative Agent, which consent shall not be unreasonably withheld, and the payment of an administrative fee to the Administrative Agent) and no purchaser of a participation shall have the right to exercise or to cause the selling Lender to exercise voting rights in respect of the Facility (except as to certain basic issues).
EXPENSES AND All reasonable out-of-pocket expenses (including but not limited INDEMNIFICATION to reasonable legal fees and expenses and expenses incurred in connection with due diligence and travel, courier, reproduction, printing and delivery expenses) of the Lenders, UBS and UBSW associated with the syndication of the Facility and with the preparation, execution and delivery, administration, amendment, waiver or modification (including proposed amendments,.waivers or modifications) of the documentation contemplated hereby are to be paid by Borrower. In addition, all out-of-pocket
- expenses (including but not limited to reasonable legal fees and expenses) of the Lenders and the administrative agent for the Facility for workout proceedings, enforcement costs and documentary taxes associated with the Facility are to be paid by abcd 5
Borrower.
Borrower will indemnify the Lenders, UBS and UBSW and their respective afflicites, and hold them harmless from and against all reasonable out-of-pocket costs, expenses (including but not limited to reasonable legal fees and expenses) and liabilities arising out of or relating to the proposed transactions, including but not limited to the Transactions or any transactions related thereto and any actual or proposed use of the proceeds of any loans made under the Facility; provided, however, that no such person will be indemnified for costs, expenses or liabilities to the extent determined by a final judgment of a court of competent jurisdiction to have been incurred solely by reason of the gross negligence or willful misconduct of such person.
GOVERNING LAW The laws of the State of New York. Each party to the Facility documentation will waive the right to trial by jury and will consent to jurisdiction of the state and federal courts located in The City of New York.
abcd
Summary of Principal Terms and Conditions of Exchange Notes Capitalized terms used but not defined herein have the meanings given (or incorporated by reference) in the Summary of Principal Terms and Conditions of the Bridge Facility to which this Exhibit A is attached.
Borrower will issue Exchange Notes under an indenture which Issuer complies with the Trust Indenture Act (the "Indenture"). Borrower in its capacity as issuer of the Exchange Notes is referred to as the "Issuer."
Same as Initial Loans Guarantors:
The Exchange Notes will be available only in exchange for the Principal Amount:
Initial Loans (at the Maturity Date) or the Term Loans (at any time).
The principal amount of any Exchange Note will equal 100% of the aggregate principal amount of the Initial Loans or the Term Loans for which it is exchanged.
The Exchange Notes will mature on the tenth anniversary of the Maturity:
Closing Date.
The Exchange Notes will bear interest at a rate equal to the Initial Interest Rate:
Rate (as defined below) plus the Exchange Spread (as defined below). Notwithstanding the foregoing, the interest rate in effect at any time shall not exceed 16.0% per annum, and to the extent the interest payable on any Exchange Note exceeds a rate of 14.0% per annum, the Issuer may, at its option, cause such excess interest to be paid by issuing additional Exchange Notes in a principal amount equal to such excess portion of interest. The "Initial Rate" shall be equal to the interest rate applicable to the Initial Loans and in effect on the Maturity Date. "Exchange Spread" shall mean 0 basis points (or 50 basis points if the Notes are rated less than BB by S&P or less than Ba2 by Moody's).
Any holder of Exchange Notes may, at its option, elect to have all or part of its Exchange Notes accrue at a fixed interest rate equal to the interest rate in effect at the time of the election.
Calculation of interest shall be on the basis of the actual number of days elapsed in a year of twelve 30-day months.
In the event of a payment default on the Exchange Notes, Default Interest interest on the Exchange Notes will accrue at a rate of 2.0%7 per annum in excess of the rate otherwise applicable to such Exchange Notes, and will be payable in accordance with the provisions described above under the heading "Interest."
Same as Initial Loans Rankina:
The Issuer will be required to offer to purchase the Exchange Mandatory Offer to Purchase:
Notes upon a Change of Control (to be defined in the Indenture) at 101% of the principal amount thereof plus accrued interest to the date of purchase.
abed 7
Redemption of Exchange Notes will be subject to restrictions and Optional Redemption: premiums typical for high-yield debt securities.
The Issuer will be required to:
Re-olstration Ri-ghts within 60 days after the initial issuance of the Exchange Notes (the "Issue Date"), file a registration statement for an offer to exchange the Exchange Notes for publicly registered notes with identical terms; use its reasonable best efforts to cause the registration statement to become effective under the Securities Act within 120 days after the Issue Date; complete the exchange offer within 180 days after the Issue Date; and file a shelf registration statement for the resale of the Exchange Notes if it cannot complete an exchange offer within those time periods listed above and in certain other circumstances.
If the Issuer does not comply with these obligations, it will be required to pay additional interest to the holders of the Exchange Notes.
In addition, unless and until the Issuer has consummated the exchange offer and, if required, caused the shelf registration statement to become effective, the holders of the Exchange Notes will have the right to "piggy-back" the Exchange Notes in the registration of any debt securities (subject to customary scale back provisions) that are registered by the Issuer (other than on a Form S-4) unless all the Exchange Notes and Term Loans will be redeemed or repaid from the proceeds of such securities.
The holders of the Exchange Notes shall have the absolute and Right to Transfer Exchange unconditional right to transfer such Exchange Notes in Notes compliance with applicable law to any third parties.
Those typical for an indenture governing a high yield note issue of Covenants a new issuer.
Those typical for an indenture governing a high yield note issue of Events of Default a new issuer.
The laws of the State of New York.
Goverlnng Law abcd 8
EXHIBIT "A" 2
Draft of 1/23/03 Exhibit A UBS AG UBS WARBURG LLC Stamford Branch 299 Park Avenue 677 Washington Blvd. New York, New York 10171 Stamford, Connecticut 06901 9,2003 Pacific Gas and Electric Company 77 Beale Street San Francisco, California 94105 Attn:
Re: Bridge Facility Commitment Letter Ladies and Gentlemen:
UBS Warburg LLC ("UBSW") is actingas financing and capital markets arranger for the California Public Utilities Commission ("CPUC") and the Official Unsecured Creditors Committee ("OCC") (collectively, the "Proponents"), in connection with the financing of the Third Amended Chapter 11 Plan of Reorganization filed by the Proponents, as amended to the date hereof (the "Plan"), for Pacific Gas and Electric Company (the "Borrower" or the "Company")) in its Chapter 11 case. UBSW and the Proponents have entered into an engagement agreement dated October 2, 2002 (the "Engagement Agreement"), which has been approved by the United States Bankruptcy Court for the Northern District of California (the "Bankruptcy Court")
pursuant to an order of the Bankruptcy Court dated October 30, 2002 (the "Engagement Order"). This Commitment Letter is being delivered at the request of the Proponents, and with the approval of the Bankruptcy Court, pursuant to Section 2(c) of the Engagement Agreement and the Bridge Facility Agreement, dated February [ ], 2003 (the "Proponents Bridge Agreement"), among UBS AG, Stamford Branch ("UBS"),
UBSW and the Proponents, as approved pursuant to an order of the Bankruptcy Court dated February [ ], 2003 (the "Approval Order").
Under the Plan, the Company would be refinanced as an integrated utility. Cash payments to creditors under the Plan will be approximately $12.173 billion and additional claims will be either reinstated or reorganized into approximately $545 million of debt and $432 million of preferred stock of the Company. Funds to provide the cash payments to creditors will include approximately (i) $5.8 billion of first mortgage bonds (the "First Mortgage Bonds"); (ii) $1.5 billion of senior secured credit facilities (the "Term Credit Facility"); (iii) an aggregate of $1.5 billion of senior unsecured notes (the "Senior Notes") and preferred stock or preferred securities (the "Preferred Stock") of the Company or, in the event the Senior Notes or Preferred Stock are not issued at the time (MP) 20543/016/AGTS/ConmdtmenLLetter.doc
Commitment Letter 2 9__
2003 the Transactions are consummated, borrowings by the Company of up to $1.5 billion under a senior unsecured credit facility (the "Bridge Facility") as described in the Summary of Principal Terms and Conditions attached hereto as Annex I (the "Bridge Facility Term Sheet"); and (iv) approximately $3.4 billion of cash available at the Company. In addition, the reorganized Company would have available up to $1.9 billion in facilities from a combination of (i) a senior secured revolving credit facility (the "Revolving Credit Facility") and (ii) a securitization of accounts receivable of the Company (the "Receivables Facility"). The First Mortgage Bonds, Senior Notes, Preferred Stock and Receivables Facility are referred to herein collectively as the "Securities" and the Term Credit Facility and the Revolving Credit Facility are referred to herein collectively as the "Credit Facilities." We have previously delivered to the Proponents, as attachments to our "highly confident" letter dated November 15, 2002 (the "Highly Confident Letter"), term sheets summarizing the anticipated terms of the Securities and the Credit Facilities at that date. As used herein, the term "Transactions" means the reorganization of the Company in accordance with the terms of the Plan to occur on the effective date of the Plan, including, without limitation, the issuance and sale of the Securities, the execution and delivery of and initial borrowings under the Credit Facilities and execution and delivery of the Reorganization Agreement between the CPUC and the Company contemplated by the Plan.
Commitments You have requested that UBS AG, Stamford Branch ("UBS") commit to provide the Bridge Facility and that UBSW agree to structure, arrange and syndicate.the Bridge Facility. UBS is pleased to advise you of its commitment to provide the entire amount of the Bridge Facility to the Borrower upon the terms and subject to the conditions set forth or referred to in this Commitment Letter. The commitment of UBS and each other Lender (as defined below) hereunder is subject to the negotiation, execution and delivery of definitive documentation (the "Bridge Documentation") with respect to the Bridge Facility satisfactory to UBSW, UBS and the other Lenders reflecting, among other things, the terms and conditions set forth herein, in the Bridge Facility Term Sheet and in the letter of even date herewith addressed to you providing, among other things, for certain fees relating to the Bridge Facility (the "Bridge Facility Fee Letter"). The structure, covenants and terms of the Bridge Facility will be based on those set forth in the Bridge Facility Term Sheet modified as determined by UBSW in consultation with you to reflect (A) market and other conditions at the time of the syndication of the Bridge Facility and (B) the capital structure and the business and financial condition and prospects of the reorganized Company at such time.
Syndication It is agreed that UBSW will act as the sole and exclusive advisor, arranger and bookmanager for the Bridge Facility, and will exclusively manage the syndication of the Bridge Facility, and will, in such capacities, exclusively perform the duties and exercise the authority customarily associated with such roles. It is further agreed that no additional advisors, agents, co-agents, arrangers or bookmanagers will be appointed and no Bridge Lender will receive compensation with respect to the Bridge Facility outside the terms contained herein in order to obtain its commitment to participate in such Bridge Facility, in each case unless you and we so agree.
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Commitment Letter 3 _, 2003 UBS reserves the right, prior to or after the execution of the Bridge Documentation, to syndicate all or a portion of its commitment to one or more institutions that will become parties to the Bridge Documentation (UBS and the institutions that will become parties to the Bridge Documentation, the "Lenders"). Upon any such additional Lender issuing its commitment to provide a portion of any of the Bridge Facility, UBS shall be released from a portion of its commitment in respect of such Bridge Facility in an aggregate amount equal to the commitment of such Lender.
UBSW will exclusively manage all aspects of the syndication of the Bridge Facility in consultation with you, including selection of additional Lenders, determination of when UBSW will approach potential additional Lenders, any naming rights and the final allocations of the commitments in respect of the Bridge Facility among the additional Lenders. To assist UBSW in its syndication efforts, the Company agrees to (a) promptly prepare and provide all financial and other information as we may reasonably request with respect to the Company and its subsidiaries, the Plan and any other transactions contemplated hereby, including but not limited to financial projections (the "Projections") relating to the foregoing, (b) use commercially reasonable efforts to ensure that the syndication efforts benefit materially from existing lending relationships of the Company and its subsidiaries, (c) make available to prospective Lenders senior management and advisors of the Company and its respective subsidiaries, (d) host, with UBSW, one or more meetings with prospective Lenders, (e) assist UBSW in the preparation of one or more confidential information memoranda satisfactory to UBSW and other marketing materials to be used in connection with the syndication of the Bridge Facility, and (f) obtain, at your expense, ratings of the Credit Facilities and the Securities from rating agencies selected by UBSW and to participate actively in the process of securing such ratings, including having senior management of the Company meet with such rating agencies.
Information The Company represents and covenants that (a) all information (other than the Projections) concerning the Company and its subsidiaries, the Transactions and the other transactions contemplated hereby (the "Information") that has been or will be made available to any of the Lenders or UBSW by it or any of its representatives in connection with the transactions contemplated hereby, when taken as a whole, is or will be complete and correct in all material respects and does not or will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements are made and (b) the Projections that have been or will be made available to any of the Lenders or UBSW by it or any of its representatives in connection with the transactions contemplated hereby have been and will be prepared in good faith based upon assumptions believed by it to be reasonable. The Company agrees to supplement the Information and the Projections from time to time and agree to advise UBSW of any development materially affecting the Company or any of its subsidiaries or affiliates or the transactions contemplated hereby or the accuracy of Information and Projections previously furnished to UBSW or any of the Lenders. The Company acknowledges that UBS and UBSW may share with any of their affiliates, and such affiliates may share with UBS and UBSW, any information related to the Company or its subsidiaries or affiliates (MP) 20543/016/AGTS/Commitnient.Leuter.doc 12/16/02 9:34 AM
Commitment Letter 4 ___, 2003 (including in each case information relating to creditworthiness) and the transactions contemplated hereby.
Compensation As consideration for the commitments of the Lenders hereunder with respect to the Bridge Facility and the agreement of UBSW to structure, arrange and syndicate the Bridge Facility and to provide advisory services in connection therewith, the Company, pursuant to order of the Bankruptcy Court shall pay to UBS the fees set forth in the Bridge Facility Term Sheet and Bridge Facility Fee Letter. Once paid, such fees shall not be refundable under any circumstances.
Conditions The commitment of the Lenders hereunder with respect to the Bridge Facility and UBSW's agreement to perform the services described herein with respect to the Bridge Facility may be terminated by UBS if: (i) t any information submitted to UBS or UBSW by or on behalf of the Company or any subsidiary or affiliate of the Company is inaccurate, incomplete or misleading in any respect determined by UBS to be material (ii) the results of UBS's business, financial, legal, tax, environmental and accounting due diligence relating to the Company, its subsidiaries and the transactions contemplated hereby are not satisfactory to UBS, or UBS is not satisfied that, after giving effect to the Transactions, the Company's revenues will be sufficient to meet in full its obligations under the First Mortgage Bonds, the Receivables Facility, the Credit Facilities and the Bridge Facility; (iii) all requisite regulatory, governmental, shareholder and other third party approvals required to consummate the transactions contemplated in the Plan will be timely received and shall be in effect and not subject to any stay, appeal or similar challenge; (iv) there shall be any pending or threatened litigation or other proceedings (private or governmental) which UBS determines could reasonably be expected to have a material adverse effect on the transactions contemplated hereby, including the financing therefor or a material adverse effect on the business, results of operation, condition (financial or otherwise), assets, liabilities or prospects of the Company and its subsidiaries; (v) any change occurs, or any additional information is disclosed to or discovered by UBS (including, without limitation, information contained in any review or report required to be provided to it in connection herewith), which UBS deems to be materially adverse in respect of the business, results of operations, condition (financial or otherwise), assets, liabilities or prospects of the Company and its subsidiaries; (vi) the transactions contemplated by the Plan and the financing therefor (including borrowings under the Credit Facilities) are not in full compliance with all applicable legal requirements, including without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System; (vii) any of the fees provided for herein or in the Bridge Facility Term Sheet, the Bridge Facility Fee Letter or the Engagement Agreement are not paid when due; (viii) in the sole judgment of UBS, a material adverse change or material disruption has occurred in the financial, banking or capital markets generally after the date of this Commitment Letter (including, without limitation, the markets for loans to or debt securities issued by companies similar to the Company or for asset-backed securities similar to the Receivables Facility), which has had or could reasonably be expected to have a material adverse effect on the syndication of any (MP) 20543/016/AGTS/CommitrnenLLetter.doc 12/16/02 9"34 AM
Commitment Letter 5 _ 92003 portion of the Credit Facilities, the marketing of the Securities or the syndication of the Bridge Facility; (ix) the Senior Notes are not rated at least BB and Ba2, respectively, by Standard & Poor's Ratings Group ("S&P") and Moody's Investors Service, Inc.
("Moody's); (x) any condition set forth in the Bridge Facility Term Sheet is not satisfied or any covenant or agreement in this Commitment Letter or the Bridge Facility Fee Letter is not complied With; (xi) the Approval Order or the Engagement Order is reversed, vacated, stayed or modified in any respect; (xii) the Company has not executed and delivered this Commitment Letter and the Bridge Facility Fee Letter and paid the Acceptance Fee within five days following the confirmation date of the Plan (the "Confirmation "Date").
Clear Market From the Confirmation Date until completion of syndication of the Bridge Facility, Credit Facilities and the sale or placement of the Securities (as determined by UBSW and notified in writing to the Company) and the termination of the Company's obligations under this Commitment Letter, the Company shall ensure that no financing for the Company or its subsidiaries or affiliates shall be syndicated or placed without the prior written consent of UBS if such financing, syndication or placement would have, in the judgment of UBS, a detrimental effect upon the transactions contemplated hereby. In addition, until the earlier of the latest Maturity Date (as defined in the Term Sheets) and the repayment in full of the Bridge Facility, any efforts to sell or place any debt securities or preferred stock of the Company or its subsidiaries, including marketing and pre-marketing activities, shall be conducted in a manner acceptable to UBS.
Indemnity By its acceptance of this Commitment Letter, the Company hereby agrees to indemnify and hold harmless each of UBSW, UBS and the other Lenders and their respective affiliates (including, without limitation, controlling persons) and the directors, officers, employees, advisors and agents of the foregoing (each, an "Indemnified Person") from and against any and all losses, claims, costs, expenses, damages or liabilities (or actions or other proceedings commenced or threatened in respect thereof) that arise out of, result from or in any way relate to this Commitment Letter, the Bridge Facility Term Sheet, the Bridge Facility Fee Letters, the Bridge Facility or any of the transactions contemplated hereby or the providing or syndication of the Bridge Facility, and to reimburse each Indemnified Person upon its demand for any legal or other expenses incurred in connection with investigating, preparing to defend or defending against, or participating in, any such loss, claim, cost, expense, damage, liability or action or other proceeding (whether or not such Indemnified Person is a party to any action or proceeding), other than any of the foregoing of any Indemnified Person to the extent determined by a final judgment of a court of competent jurisdiction to have resulted solely by reason of the gross negligence or willful misconduct of such Indemnified Person. The Company shall not be liable for any settlement of any such proceeding effected without its written consent, but if settled with such consent or if there shall be a final judgment for the plaintiff, the Company shall indemnify the Indemnified Persons from and against any loss or liability by reason of such settlement or judgment (MP) 20543/016/AGTS/CommitmentLetter.doc I 1261602 9".34 AM
Commitment Letter 6 __9 2003 subject to its rights in this paragraph to claim exemption from your indemnity obligations. The Company shall not, without the prior written consent of any Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability or claims that are the subject matter of such proceeding. None of UBSW, UBS or any other Lender (or any of their respective affiliates) shall be responsible or liable to any Proponent, the Company or any of its subsidiaries, affiliates or stockholders or any other person or entity for any consequential damages which may be alleged as a result of this Commitment Letter, the Bridge Facility Term Sheet, the Bridge Facility Fee Letter, the Bridge Facility or the transactions contemplated hereby. In addition, the Company hereby agrees to reimburse each of the Lenders, UBS and UBSW from time to time upon demand for all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable legal fees and expenses of UBS's and UBSW's counsel, appraisal, consulting and audit fees, and printing, reproduction, document delivery, travel, communication and publicity costs) incurred in connection with the syndication and execution of the Facilities, and the preparation, review, negotiation, execution and delivery of this Commitment Letter, the Bridge Facility Term Sheets, the Bridge Facility Fee Letter, the Bridge Documentation and the administration, amendment, modification or waiver thereof (or any proposed amendment, modification or waiver), whether or not the Closing Date occurs or any Bridge Documentation is executed and delivered or any extensions of credit are made under the Bridge Facility.
Governing Law, Etc.
This Commitment Letter shall not be assignable by the Company without the prior written consent of UBS and UBSW, and any purported assignment without such consent shall be void. This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by UBS, UBSW and the Company. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Commitment Letter. Headings are for convenience only. This Commitment Letter is intended to be for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and the Lenders. This Commitment Letter shall be governed by, and construed In accordance with, the laws of the State of New York without regard to principles of conflicts of law. Any right to trial by jury with respect to any claim or action arising out of this Commitment Letter is hereby waived. Except where jurisdiction properly lies with the Bankruptcy Court, the Company hereby submits to the non-exclusive jurisdiction of the federal and New York State courts located in The City of New York (and appellate courts thereof) in connection with any dispute related to this Commitment Letter or any of the matters contemplated hereby, and agree that service of any process, summons, notice or documents by registered mail addressed to it shall be effective service of process against it for any suit, action or proceeding relating to any such dispute. The Company irrevocably and unconditionally waives any objection to the (MP) 20543/016/AGTS/CommitmenLLeter.doc 12/16102 9-34 AM
Commitment Letter 7 2003 laying of such venue and any suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.
A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts to whosejurisdiction such party is or may be subject by suit upon judgment.
Termination The commitments of the Lenders and the agreement of UBSW to perform services hereunder shall expire on the earliest of(i) the completion of the Transactions without the funding of the Bridge Facility, (ii) UBS having given written notice to the Company of termination of the commitments as a result of there having occurred or existing an event or condition specified in "Conditions", and (iii) 5:00 p.m., New York City time, on September 30, 2003.
The compensation, expense reimbursement, confidentiality, indemnification and governing law and forum provisions hereof and in the Bridge Facility Term Sheet and the Bridge Facility Fee Letter shall survive termination of this Commitment Letter (or any portion hereof) or the commitments of the Lenders hereunder. The provisions under the headings "Conditions," "Syndication" and "Clear Market" above shall survive the execution and delivery of the Bridge Documentation
[Signature Page Follows]
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Commitment Letter 8 "",2003 UBS and UBSW are pleased to have been given the opportunity to assist you in connection with the financing of the Plan. Please indicate your acceptance of the terms hereof and of the Bridge Facility Term Sheet by returning to us executed counterparts of this Commitment Letter.
Very truly yours, UBS WARBURG LLC UBS AG, STAMFORD BRANCH By:, By:
Name: Name:
Title:
Title:
By: By:
Name: Name:
Title:
Title:
Accepted and agreed to:
PACIFIC GAS AND ELECTRIC COMPANY By:
Name:
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EXHIBIT "B" 3
Exhibit B UBS AG UBS WARBURG LLC Stamford Branch 299 Park Avenue 677 Washington Boulevard New York, New York 10171 Stamford, Connecticut 06901 I ,2003 2 Pacific Gas and Electric Company 3 77 Beale Street 4 San Francisco, California 94105 5
6 Attn:
7 8 Bridge Facility Fee Letter 9
10 Ladies and Gentlemen:
11 Reference is made to the letter dated the date hereof among UBS AG, Stamford 12 Branch ("IUS"), UBS Warburg LLC ("UBSW") and you (including the Bridge Facility Term Sheet 13 set forth on Annex I thereto, the "Commitment Letter"). Capitalized terms used but not defined in 14 this letter agreement are used with the meanings given to them in the Commitment Letter 15 Pursuant to an order of the Bankruptcy Court, Pacific Gas and Electric Company has 16 previously paid a "Delivery Fee" in an amount equal to $15 million (1.00% of the aggregrate commits 17 ted amount of the Bridge Facility). As additional consideration for UBS's and UBSW's respective 18 agreements under the Commitment Letter, you agree to pay to UBS as follows:
Acceptance Fee: An acceptance fee (the "Acceptance Fee") in an amount equal to 1.00% of the aggregate committed amount of the Bridge Facility, due and payable on the date upon which the Company, pursuant to an order of the Bankruptcy Court, accepts the Commitment Letter by countersigning it and delivering the Commitment Letter and this Bridge Fa cility Fee Letter to UBSW.
Ticking Fee: A ticking fee (the "Ticking Fee"), accruing from date of delivery of the Commitment Letter to the Company by UBS and UBSW (which was February _, 2003) through and including the earlier of the Closing Date and the date that the commitment under the Commitment Letter is ter minated orexpires pursuant to the terms thereof, in an amount equal to .50% per annum of the full amount of the aggregate committed amount of the Bridge Facility (com puted on the basis of the actual number of days elapsed DRAFT: 1/24/03 12:06 PM #337947 v7 (BRIDGEFACIUTYFEELETTER2CLEAN.DOC)
over a 360-day year), due and payable in cash on the earlier of the Closing Date and the date that the commitment is terminated or expires pursuant to the terms of the Com mitment Letter. The amount of the Ticking Fee shall be reduced by the amount of the Acceptance Fee actually paid to UBS.
Funding Fee: A funding fee (the "Funding Fee") in an amount equal to 1.00% of the aggregate funded amount of the Bridge Facil ity, due and payable in cash upon the funding of the Bridge Facility.
Conversion Fee: A conversion fee (the "Conversion Fee") in an amount equal to 3.00% of the aggregate principal amount of the Initial Loans (as defined in the Bridge Facility Term Sheet) then outstanding on the earlier of (A) the Maturity Date (as defined in the Bridge Facility Term Sheet), due and pay able in cash on the Maturity Date, such required payment constituting a condition to the conversion of the Initial Loans to Term Loans or Exchange Notes (each, as defined in the Bridge Facility Term Sheet) on such date, and (B) the date on which the Bridge Facility is refinanced (in whole or in part).
19 20 The Commitment Fee, Acceptance Fee, Ticking Fee, Funding Fee, and Conversion 21 Fee are referred to herein collectively as the "Fees". The Fees shall be payable in U.S. dollars in im 22 mediately available funds to UBS for its own account or as directed by UBS. Once paid, the Fees 23 shall not be refundable under any circumnstances. At the sole discretion of UBS, after consultation 24 with you, all or any portion of any of the Fees may be paid to any other Lender or Lenders.
25 You agree to engage one or more investment banks (collectively, the "Investment 26 Ban..k") reasonably satisfactory to UBS to publicly sell or privately place, in one or more transactions, 27 the Senior Notes, the Preferred Stock and the other Securities and to arrange the Credit Facilities.
28 The proceeds of the sale of Senior Notes and Preferred Stock will be used to provide funds for the 29 Transactions if such sale or placement is completed on or prior to the consummation thereof (and 30 thereby reducing on a dollar-for-dollar basis the aggregate amount of the commitments of the Lenders 31 under the Commitment Letter in respect of the Bridge Facility.
32 To the extent such sale or placement occurs subsequent to the making of loans under 33 the Bridge Facility, the proceeds will be used to refinance loans under the Bridge Facility. The Com 34 pany shall take any and every action necessary or desirable so that the Investment Bank can, as soon 35 as practicable whether prior to or after the making of loans under the Bridge Facility, publicly sell or 36 privately place the Securities. Upon notice by the Investment Bank (a "Securities Demand"), at any DRAFT: 1/24/03 12:06 PM #337947 v7 (BRIDG5_FACILITYFEELETTER2CLEAN.DOC)
37 time and from time to time prior to the Maturity Date of the Bridge Facility if all loans under the 38 Bridge Facility shall not have been repaid in full, you will cause the issuance and sale of Securities, in 39 one or more transactions (each, a "Securities Offering"), upon such terms and conditions and in such 40 amounts of gross proceeds as specified in the Securities Demand; provided,however, that (i) the in 41 terest and/or dividend rates (whether floating or fixed) shall be determined by the Investment Bank in 42 light of the then prevailing market conditions; provided,that the cash interest or dividend rate, as ap 43 plicable, on the Securities shall not exceed 14.0% per annum and the total interest or dividend rate, as 44 applicable, on the Securities shall not exceed 16.0% per annum; (ii) the Investment Bank shall deter 45 mine whether the Securities shall be issued through a public offering or a private placement; (iii) the 46 maturity of any Securities shall not be earlier than six months after the final maturity of the Credit 47 Facilities; (iv) the Securities will be guaranteed on a basis reasonably satisfactory to the Investment 48 Bank; (v) the Securities will be issued pursuant to one or more indentures or securities purchase 49 agreements and which shall contain such terms, conditions and covenants as are typical and custom 50 ary for similar fmancings, whether high yield, mezzanine or otherwise (as determined by the Invest 51 ment Bank) and as are satisfactory in all respects to the Investment Bank; and (vi) all other arrange 52 ments with respect to the Securities shall be satisfactory in all respects to the Investment Bank in light 53 of the then prevailing market conditions.
54 It is understood and agreed that this letter agreement shall not constitute or give rise 55 to any obligation to provide any financing; such an obligation will arise only under the Commitment 56 Letter if accepted in accordance with its terms. This letter agreement may not be amended or any 57 provision hereof waived or modified except by an instrument in writing signed by UBS, UBSW and 58 you. This letter agreement may be executed in any number of counterparts, each of which shall be an 59 original and all of which, when taken together, shall constitute one agreement. Delivery of an exe 60 cuted counterpart of a signature page of this letter agreement by facsimile transmission shall be effec 61 tive as delivery of a manually executed counterpart of this letter agreement. This letter agreement 62 shall be governed by, and construed in accordance with, the laws of the State of New York 63 without regard to principles of conflicts of law. Any right to trial by jury with respect to any claim 64 or action arising out of this letter agreement or conduct in connection with this agreement is hereby 65 waived. The provisions of this letter agreement shall survive the expiration or termination of the 66 Commitment Letter (including any extensions thereof).
67 [Signature Page Follows]
68 DRAFT: 1/24/03 12:06 PM #337947 v7 (BRIDGEFACILITYFEELETTER2CLEAN.DOC)
68 Please confirm that the foregoing is our mutual understanding by signing and return 69 ing to us an executed copy of this letter agreement.
70 Very truly yours, 71 UBS AG, STAMFORD BRANCH 72 By:
73 Name:
74
Title:
75 By:
76 Name:
77
Title:
78 UBS WARBURG LLC 79 By:
80 Name:
81
Title:
82 By:
83 Name:
84
Title:
85 Accepted and agreed to as of the date first above 86 written:
87 PACIFIC GAS AND ELECTRIC COMPANY 88 By:
89 Name:
90
Title:
91 92 DRAFT: 1/24/03 12:06 PM #337947 V7 (BRIDGEFACILITYFEELETrER2CLEAN.DOC)