ML040340349
| ML040340349 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 01/26/2004 |
| From: | Harvey K 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 DM, 94-0742640 | |
| Download: ML040340349 (4) | |
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10 I1I JAMES L. LOPES (No. 63678)
JEFFREY L. SCHAFFER (No. 91404)
GARY M. KAPLAN (No. 155530)
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 13
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C1 16 17 In re PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, Debtor.
Federal I.D. No. 94-0742640 Case No. 0 1-30923 DM Chapter 11 Date:
Time:
Place:
February 26, 2004 1:30 p.m.
235 Pine Street, 22nd Floor San Francisco, California 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF KENT M. HARVEY IN SUPPORT OF DEBTOR'S MOTION FOR ORDER MODIFYING STIPULATION: (I) AUTHORIZING USE OF CASH COLLATERAL PURSUANT TO 11 IU.S.C. § 363 AND BANKRUPTCY RULE 4001 AND (II) GRANTING ADEQUATE PROTECTION PURSUANT TO 11 U.S.C. §§ 361 AND 363, TO ENABLE MARCH 2004 PRINCIPAL PAYMENT ON CERTAIN MORTGAGE BONDS LAP~
DECLARATION OF KENT M. HARVEY IN SUPPORT OF DEBTOR'S MOTION [ETC.]
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I, Kent M. Harvey, declare as follows:
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I am the chief financial officer of Pacific Gas and Electric Company ("PG&E" or 3
the "Debtor"), the debtor and debtor-in-possession in this Chapter 11 Case. This Declaration 4
is based on my personal knowledge of PG&E's operations and financial position (except as 5
to any matters stated on information on belief, and as to such matters, I am informed and 6
believe they are true). If called as a witness, I could and would testify competently to the 7
facts stated herein.
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I make this Declaration in support of the Debtor's Motion for Order Modifying 9
Stipulation: (I) Authorizing Use Of Cash Collateral Pursuant To 11 U.S.C. §363 And 10 Bankruptcy Rule 4001 And (II) Granting Adequate Protection Pursuant To 11 U.S.C. §§361 11 and 363, To Enable March 2004 Principal Payment On Certain Mortgage Bonds (the 12 "Motion").
The Motion seeks approval of a certain proposed modification to the 13 Stipulation: (I) Authorizing Use Of Cash Collateral Pursuant To 11 U.S.C. §363 And RuE amW 14 Bankruptcy Rule 4001 And (II) Granting Adequate Protection Pursuant To 11 U.S.C. §§361 MNI 15 and 363, as modified to date (the "Stipulation"), between PG&E and BNY Western Trust 16 Company, as successor trustee (the "Indenture Trustee") pursuant to that certain indenture 17 dated December 1, 1920 with respect to mortgage bonds issued by PG&E, which indenture 18 has been supplemented by 14 supplemental indentures (collectively, the "Indenture"). In 19 particular, the proposed modification would provide for the timely payment by PG&E of the 20 principal amount of the 1993 Series G Bonds scheduled to mature on March 1, 2004 (the 21 "Bonds"), in the approximate amount of $310 million. Attached hereto as Exhibit 1 is a true 22 and correct blacklined copy of the revised Stipulation, reflecting the proposed revisions 23 thereto (in paragraph 21).1 24 25 1 Exhibit 1 is not attached to the service copies of this Declaration. You may obtain copies of such documents through the "Pacific Gas & Electric Company Chapter 11 Case" 26 linik accessible through the Bankruptcy Court's website (www.canb.uscourts.gov), or by written request by mail to Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Attn:
27 Jerome Ferrer, Three Embarcadero Center, 7th Floor, San Francisco, California 94111-4065, 28 or by e-mail request to jferrer~hrice.com.
DECLARATION OF KENT M. HARVEY IN SUPPORT OF DEBTOR'S MOTION [ETC.]
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On or about May 9, 2001, this Court issued its Order on Debtor's Motion For 2
Order Approving Stipulation: (I) Authorizing and Restricting Use of Cash Collateral 3
Pursuant to 11 U.S.C. § 363 and Bankruptcy Rule 4001 and (II) Granting Adequate 4
Protection Pursuant to 11 U.S.C. §§ 361 and 363, approving PG&E's entry into and 5
performance under the Stipulation. The Stipulation provides for PG&E's continued use of 6
cash collateral in which the Indenture Trustee has an interest (on behalf of the holders of the 7
Bonds) pursuant to certain conditions and restrictions. Among other things, the Stipulation 8
provides for the timely payment of interest and sinking fund payments as provided under the 9
Indenture. The annual amount of interest and sinking fund payments currently accruing on 10 the Bonds is approximately $230 million.
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On February 1, 2002, the Debtor filed a motion for an order modifying the 12 Stipulation to permit the Debtor's timely payment of $333 million in principal amount of HOUARD 13 mortgage bonds that matured on March 1, 2002. On February 26, 2002, the Court issued RN CANIN 14 its order so modifying the Original Stipulation by adding the following language to eNI 15 paragraph'21 of the Stipulation: "In addition the principal amount of the Bonds scheduled to 16 mature on March 1, 2002 in the approximate amount of $333 million shall be payable on the 17 terms set forth in the Indenture."
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On June 20, 2003, the Debtor filed a motion for an order further modifying the 19 Stipulation to permit the Debtor's timely payment of $281 million in principal amount of 20 mortgage bonds that matured on August 1,2003. On July 21, 2003, the Court issued its 21 order so further modifying the Stipulation by adding the following language to paragraph 21 22 of the Stipulation: "In addition the principal amount of the Bonds scheduled to mature on 23 August 1, 2003 in the approximate amount of $281 million shall be payable on the terms set 24 forth in the Indenture."
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To the best of my knowledge, PG&E and the Indenture Trustee have continued to 26 perform their respective obligations under the Stipulation.
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I am informed and believe that PG&E's obligations under the Indenture are 28 substantially oversecured. The total unpaid indebtedness under the Bonds is approximately DECLARATION OF KENT M. HARVEY IN SUPPORT OF DEBTOR'S MOTION [ETC.]
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$3.0 billion. Such indebtedness is secured by a first-priority lien on substantially all of PG&E's assets. PG&E reported total assets of approximately $27.8 billion as of November 30, 2003 on its most recently filed Operating Report.
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The 1993 Series G Bonds, which are scheduled to mature on March 1, 2004, accrue interest at 6 1/4 percent (6.25%) per annum. If PG&E is authorized to make the March 2004 principal payment on the Bonds, it expects to do so using cash currently held by the estate. As reported on PG&E's most recent Operating Report, PG&E had a cash balance of approximately $4.1 billion as of November 30, 2003. PG&E submits that such payment will benefit the estate financially because the Bonds accrue interest at a rate significantly in excess of the rates currently being earned by PG&E on its cash balances. By contrast, if PG&E fails to timely make the March 2004 principal payment, it risks being in default under the Indenture, and the negative consequences that may flow from such a default (e.g., the potential acceleration of all series of the Bonds).
I declare under penalty of perury under the laws of the United States of America and the State of California that the foregoing is true and correct. Executed this 2__ day of January, 2004 at San Francisco, California.
DATED: January2, 2004
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KENT M. HARVE WD 012204/111419910/108/112434 1/v2 DECLARATION OF KENT M. HARVEY IN SUPPORT OF DEBTOR'S MOTION [ETC.]