ML032410262
| ML032410262 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 08/21/2003 |
| From: | Donnelly M Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Pacific Gas & Electric Co |
| To: | Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California |
| References | |
| 01-30923 D M, 94-0742640 | |
| Download: ML032410262 (4) | |
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9 10 11 JAMES L. LOPES (No. 63678)
JANET A. NEXON (No. 104747)
BARBARA GORDON (No. 52424)
HOWARD, RICE, NEMEROVSKI, CANADY, FALK & RABKIN A Professional Corporation Three Embarcadero Center, 7th Floor San Francisco, California 94111-4065 Telephone:
415/434-1600 Facsimile:
415/217-5910 Attorneys for Debtor and Debtor in Possession PACIFIC GAS AND ELECTRIC COMPANY UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 12 K-waRD 13 MERY "FA~ 14 15 16 17 18 In re PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, Debtor.
Federal I.D. No. 94-0742640, Case No. 01-30923 DM Chapter 11 Case Date:
Time:
Place:
Judge:
September 10, 2003 9:30 a.m.
235 Pine Street, 22nd Floor San Francisco, California Hon. Dennis Montali 19 20 21 22 23 24 25 26 27 28 DECLARATION OF MICHAEL J. DONNELLY IN SUPPORT OF PG&E'S MOTION FOR AUTHORITY TO PAY FEES OF DESIGNATED UNDERWRITERS' COUNSEL DONNELLY DECL. ISO PG&E'S MOT. FOR AUTHORIY TO PAY FEES OF DESIGNATED UNDERWRTERS' COUNSEL
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cANFAARY 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I, Michael J. Donnelly, declare as follows:
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I am the Assistant Treasurer of Pacific Gas and Electric Company, a position that I have held since September of 2000. Except as otherwise indicated, I make this declaration based upon my personal knowledge concerning the matters stated herein. If called as a witness, I could and would testify competently to the facts stated herein.
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I make this declaration in support of PG&E's Motion for Authority to Pay Fees of Designated Underwriters' Counsel (the "Motion").
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PG&E, together with its parent corporation, PG&E Corporation ("Parent"), and the Official Commnittee of Unsecured Creditors (the "Committee") have jointly proposed a Plan of Reorganization (the "Plan"). The Disclosure Statement for the Plan (the "Disclosure Statement") was approved by the Court on July 31, 2003. The confirmation hearing has been scheduled to commence on November 3, 2003.
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A significant component of the Plan involves the issuance of debt securities by the Reorganized Debtor as a means of financing the implementation of the Plan. The Plan provides for the Reorganized Debtor to issue and sell new debt securities in the original principal amount of approximately $8.7 billion, subject to adjustments (the "New Money Notes"), the general terms of which are set forth on the Summary of Terms of Debt Securities, Exhibit A to the Plan.
PG&E will utilize the services of underwriters in connection with the financing.
The underwriters' services will include assisting in structuring and marketing the New Money Notes to be sold to investors. As is customary in offerings of securities and in order to satisfy certain statutory requirements under the federal securities laws, the underwriters, together with their counsel, will conduct a due diligence investigation of the issuer of the securities.
Under the proposed settlement agreement between PG&E, Parent and the California Public Utilities Commission, PG&E would agree to name UBS Warburg LLC and Lehman Brothers as exclusive bookrunners and lead managers ("Underwriters").
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PG&E has designated Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden")
to act as underwriters' counsel ("Underwriters' Counsel").
In this capacity, Skadden's DONNELLY DECL. ISO PG&E'S MOT. FOR AUTHORITY TO PAY FEES OF DESIGNATED UNDERRTERS' COUNSEL 1
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& R-ABKN 15 16 17 18 19 20 21 22 23 24 25 26 27 28 services may include: (i) reviewing, drafting and/or negotiating the legal documentation, including the registration statement and related prospectus to be filed with the Securities and Exchange Commission ("SEC") by PG&E for the offerings of New Money Notes to the public; and (ii) conducting the due diligence investigation of PG&E as the issuer of the debt securities being sold to the public. Specifically, Skadden will be responsible for reviewing and assisting in revising the registration statement and prospectus for the offerings of New Money Notes for, among other things, compliance with federal and state laws, rules and regulations relating to registered securities offerings as well as the descriptions of the debt securities and the underwriting arrangements.
In connection with the preparation of the registration statement, Skadden will assist with the due diligence investigation of PG&E, which will consist of a review of PG&E's material contracts, financing arrangements, materials relating to pending or threatened litigation, environmental reports and assessments and other materials, and will meet with members of the PG&E's management and external auditors to discuss business, legal and financial affairs. Skadden will also be responsible for drafting, reviewing and/or negotiating the underwriting agreements, indentures and other legal documents relating to issuance and sale of the New Money Notes. I am informed and believe and thereupon allege that in connection with the offerings, Skadden will also provide the Underwriters with customary legal opinions with respect to matters relating to the offerings as well as a "negative assurance" letter providing the Underwriters with assurance that Skadden has no reason to believe that the registration statement or the prospectus contain any untrue statement -or omission of a material fact.
Skadden will also be responsible for reviewing the "comfort letter" provided by PG&E's external auditors, covering the audited and unaudited financial information to be included in the registration statement.
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Skadden will not represent PG&E in an attorney/client relationship with respect to its services as Underwriters' Counsel, although Skadden will continue to act as special regulatory counsel to PG&E.
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Conditions precedent to the effectiveness of the Plan include the consummation DONNELLY DECL. ISO PG&E'S MOT. FOR AUTHORITY TO PAY FEES OF DESIGNATED UNDERWRITERS' COUNSEL 1
of the sale of the New Money Notes by the Reorganized Debtor as contemplated by the Plan.
2 Preparing the registration statement for securities offerings involves substantial legal work to 3
ensure that the disclosure contained therein is fair and accurate and complies with the 4
securities laws, rules and regulations. Once the registration statement is filed, there may be a 5
lengthy SEC review process for the securities offerings before the registration statement is 6
declared effective. Skadden, pursuant to its previous employment in this case, has devoted 7
material time and attention to this process, albeit in connection with a prior plan. In order to 8
meet the foregoing conditions precedent to the effectiveness of the Plan, the legal work by 9
Underwriters' Counsel must be recommenced now in connection with the Plan. This legal 10 work will include the time-consuming and complex process of participating in the 11 preparation of the registration statement and conducting the due diligence investigation, 12 which will also require substantial coordination with the issuer and its counsel.
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It is customary for the issuer to pay for the underwriters' legal fees in connection NEMEDR c-m 14 with complex debt offerings such as those involved under the Plan.
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I am informed and believe that sound business justifications support PG&E's 16 request to pay the legal fees of Underwriters' Counsel.
It is necessary that the time-17 consuming and complex legal work to be performed by Underwriters' Counsel be done 18 promptly in order for PG&E to ensure that it can timely meet the conditions precedent to the 19 effectiveness of the Plan. Because the issuer's payment of such fees is a common business 20 practice for complex debt offerings, PG&E believes that it is necessary to pay these costs in 21 furtherance of implementation of the Plan. PG&E is solvent and has sufficient cash to pay 22 these expenses without causing any detriment to its creditors.
23 I declare under penalty of perjury under the laws of the United States of America that 24 the foregoing is true and correct. Executed this 1" day of August, 2003, at San Francisco, 25 California.
26 27 MICAL J. DONNELLY 28 WD 081903/1-1419995/109'7177tvi DONNELLY DECL. ISO PG&E'S MOT. FOR AUTHORITY TO PAY FEES OF DESIGNATED UNDERWRITERS' COUNSEL