ML022960225
| ML022960225 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 10/09/2002 |
| From: | Nexon J 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: ML022960225 (7) | |
Text
1 JAMES L. LOPES (No. 63678)
JANET A. NEXON (No. 104747) 2 JULIE B. LANDAU (No. 162038)
HOWARD, RICE, NEMEROVSKI, CANADY, 3 FALK & RABKIN A Professional Corporation 4 Three Embarcadero Center, 7th Floor San Francisco, California 94111-4065 5 Telephone: 415/434-1600 Facsimile: 415/217-5910 6
Attorneys for Debtor and Debtor in Possession 7 PACIFIC GAS AND ELECTRIC COMPANY 8
9 UNITED STATES BANKRUPTCY COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN FRANCISCO DIVISION 12 HOWR 13 In re Case No. 01-30923 DM NEMB*0M cAN,
&KAWKN 14 PACIFIC GAS AND ELECTRIC Chapter 11 Case COMPANY, a California corporation, 15 Date: October 29, 2002 Debtor. Time: 1:30 p.m.
16 Place: 235 Pine Street, 22nd Floor San Francisco, California 17 Federal I.D. No. 94-0742640 Judge: Hon. Dennis Montali 18 19 NOTICE OF MOTION AND MOTION FOR AUTHORITY TO PAY 20 FILING FEES AND PRINTER'S COSTS IN CONNECTION WITH THE FILING OF REGISTRATION STATEMENTS WITH THE SECURITIES 21 AND EXCHANGE COMMISSION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 22
[SUPPORTING DECLARATION OF MICHAEL J. DONNELLY 23 FILED SEPARATELY]
24 25 26 27 28 MOTION FOR AUTHORITY TO PAY FILING FEES AND PRINTER'S COSTS
1 NOTICE OF MOTION AND MOTION 2 PLEASE TAKE NOTICE that on October 29, 2002 at 1:30 p.m., or as soon 3 thereafter as the matter may be heard in the Courtroom of the Honorable Dennis Montali, 4 located at 235 Pine Street, 22nd Floor, San Francisco, California, Pacific Gas and Electric 5 Company, the debtor and debtor in possession in the above-captioned Chapter 11 case 6 ("PG&E"), will and hereby does move the Court for authority to pay filing fees and printer's 7 costs in connection with the filing of registration statements with the Securities and 8 Exchange Commission (the "Motion").
9 This Motion is based on this Notice of Motion and Motion, the accompanying 10 Memorandum of Points and Authorities, the Declaration of Michael J. Donnelly, filed 11 concurrently herewith, the record of this case and any evidence presented at or prior to the 12 hearing on this Motion.
HW*,D FJCE 13 PLEASE TAKE FURTHER NOTICE that pursuant to Rule 9014-1(c)(2) of the tEMSZOQS CAMA 14 Bankruptcy Local Rules for the Northern District of California, any written opposition to the
&R.ABKIN "15 Motion and the relief requested herein must be filed with the Bankruptcy Court and served 16 upon appropriate parties (including counsel for PG&E, the Office of the United States 17 Trustee and the Official Committee of Unsecured Creditors) at least five (5) days prior to the 18 scheduled hearing date. If there is no timely objection to the requested relief, the Court may 19 enter an order granting such relief without further hearing.
20 21 22 23 24 25 26 27 28 MOTION FOR AUTHORITY TO PAY FILING FEES AND PRINTER'S COSTS 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 Pacific Gas and Electric Company ("PG&E"), the debtor and debtor in possession 3 in the above-captioned Chapter 11 case, requests authority to pay certain filing fees and 4 printer's costs in connection with the filing of registration statements with the Securities and 5 Exchange Commission ("SEC") for the debt securities to be issued under PG&E's proposed 6 Plan of Reorganization. This request is made pursuant to Bankruptcy Code Section 7 363(b)(1).
8 9 I. FACTUAL BACKGROUND 1 10 PG&E filed a voluntary petition for relief under Chapter 11 of the Bankruptcy 11 Code on April 6, 2001. A trustee has not been appointed, and PG&E continues to function 12 as a debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
Howap 13 PG&E, together with its parent corporation, PG&E Corporation, has proposed a jucE NEACKIE NEME1OtSKi A
FAM 144 Plan of Reorganization (as amended from time to time, the "Plan"), which has recently been SKABMI S15 voted on by creditors, along with the competing plan of reorganization proposed by the 16 California Public Utilities Commission. The confirmation hearing has been scheduled to 17 commence on November 18, 2002.
18 The Plan provides for the creation of three new companies, ETrans LLC, GTrans 19 LLC and Electric Generation LLC (collectively, the "New Entities"), whereby PG&E will 20 separate according to its four historical lines of business and functions. Thus, the 21 Reorganized Debtor (referred to herein as "PG&E") will continue to operate the retail gas 22 and electric distribution business, ETrans LLC ("ETrans") will operate the electric 23 transmission business, GTrans LLC ("GTrans") will operate the gas transmission business, 24 and Electric Generation LLC ("Gen") will operate the electric generation business.
25 A significant component of the Plan involves the issuance of various types of 26 27 1 The evidentiary basis and support for the facts set forth in this Motion are contained in the Declaration of Michael J. Donnelly filed concurrently herewith.
28 MOTION FOR AUTHORITY TO PAY FILING FEES AND PRINTER'S COSTS 1 debt securities by the New Entities as part of the distributions to be made to holders of 2 Allowed Claims (as defined in the Plan) and by PG&E and the New Entities as a means of 3 raising the cash to pay Allowed Claims and otherwise implement the Plan.
4 As set forth in PG&E's Motion for Authority to Pay Fees of Designated 5 Underwriter's Counsel, filed on October 1, 2002, PG&E will utilize underwriters and 6 designated underwriter's counsel in connection with the securities offerings. Specifically, 7 PG&E has requested authority to pay underwriter's counsel to assist with, among other 8 items, the preparation of the registration statements and related prospectuses to be filed with 9 the SEC by PG&E and each of the New Entities for the offerings of New Money Notes2 to 10 the public and the potential resale of Long-Term Notes 3 by holders of Allowed Claims to the 11 public.
12 As conditions precedent to the effectiveness of the Plan, (i) the registration H=ap 13 statements for the New Money Notes and the Long-Term Notes must be declared effective NEMEKYv5KI 0A,,'F 14 by the SEC, and (ii) PG&E must have consummated the sale of its New Money Notes and rg KAIE-IN "15 the New Money Notes of each of the New Entities shall have been priced and their trade 16 dates shall have occurred. 4 Once the registration statements are filed, there may be a lengthy 17 SEC review process for the securities offerings before the registration statements are 18 declared effective. Therefore, in order to meet the foregoing conditions precedent to the 19 effectiveness of the Plan, PG&E intends to file the registration statements as soon as 20 possible. Currently, the legal work and due diligence process is underway in connection 21 22 2As set forth in the Plan, "New Money Notes" means, collectively, the ETrans New Money Notes, the GTrans New Money Notes, the Gen New Money Notes and the 23 Reorganized Debtor New Money Notes. Generally, the New Money Notes consist of new debt securities to be issued by PG&E and each of the New Entities and to be sold to 24 investors.
25 3 As set forth in the Plan, "Long-Term Notes" means, collectively, the ETrans Long Term Notes, the GTrans Long-Term Notes and the Gen Long-Term Notes. Generally, the 26 Long Term Notes consist of long-term debt securities to be issued by each of the New Entities under the Plan and to be distributed to holders of Allowed Claims.
27 4 See Article VI. T. of the Disclosure Statement for the Plan describing the conditions 28 precedent to the effectiveness of the Plan.
MOTION FOR AUTHORITY TO PAY FILING FEES AND PRINTER'S COSTS 1 with the preparation of the registration statements and PG&E anticipates that the registration 2 statements may be ready for filing by November 1, 2002.
3 At the time the registration statements are filed, PG&E will be required to pay 4 filing fees to the SEC. PG&E estimates that the total filing fees will be approximately 5 $500,000, based on a total principal amount of $5.36 billion in debt to be offered (the current 6 SEC filing fee is $92 for each $1 million of debt offered). In addition, a professional printer 7 will be needed to prepare and file the registration statements with the SEC in the electronic 8 filing format required by SEC Regulation S-T. The printer's costs for these services are a 9 function of the size of the filings, the number of amendments required by the SEC staff and 10 the number of individual revisions made in preparing the filings and amendments; as a 11 result, these fees are difficult to estimate in advance. However, PG&E anticipates that the 12 printer's costs for these services will not exceed $800,000 prior to confirmation of the Plan.
HOWm.D 13 After confirmation, additional amendments will be required and preliminary and final FICE NEN4EKJV'SrI
, 14 prospectuses must be printed to conduct the offerings. To the extent necessary, a separate
"-- 15 application will be made with respect to these additional costs.
16 17 II.
PAYMENT OF SEC FILING FEES AND PRINTER'S COSTS 18 FOR FILING OF REGISTRATION STATEMENTS IS APPROPRIATE PURSUANT TO BANKRUPTCY CODE 19 SECTION 363(B)(1) 20 The Court has considerable discretion in approving a request pursuant to Section 21 363(b)(1) of the Bankruptcy Code ("[t]he trustee, after notice and a hearing, may use, sell or 22 lease, other than in the ordinary course of business, property of the estate"). See Dai-Ichi 23 Kangvo Bank. Ltd. v. Montgomery Ward Holding Corp. (In re Montgomery Ward Holding 24 Cor.), 242 B.R. 147, 153 (D. Del. 1999) (affirming the bankruptcy court's decision to 25 approve expenditure for employee incentive programs, noting that bankruptcy court has 26 considerable discretion in approving a Section 363(b) motion).
27 In determining whether to authorize a transaction under Section 363(b)(1), courts 28 require a debtor to show that a sound business purpose justifies such actions, applying the MOTION FOR AUTHORITY TO PAY FILING FEES AND PRINTER'S COSTS 1 business judgment test. See, e.g., Stephens Indus., Inc. v. McClung, 789 F.2d 386, 389-90 2 (6th Cir. 1986); Committee of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 3 F.2d 1063, 1071 (2d Cir. 1983); see also 3 Lawrence P. King, Collier on Bankruptcy 4 ¶363.02[1][g] (15th ed. rev. 1998).
5 Once the debtor has articulated a rational business justification, a presumption 6 attaches that the decision was made "on an informed basis, in good faith and in the honest 7 belief that the action taken was in the best interests of the [debtor]." See e.g., Official 8 Comm. of Subordinated Bondholders v. Integrated Res., Inc. (In re Integrated Res., Inc.),
9 147 B.R. 650, 656 (S.D.N.Y. 1992) (citing Smith v. Van Gorkom, 488 A.2d 858 (Del.
10 1985)).
11 Sound business justifications support PG&E's request to pay the SEC filing fees 12 and printer's costs described above. These costs must be incurred in order to file the HOWAR 13 registration statements with the SEC and to proceed with the process of obtaining SEC PICE
.cNy 14 clearance for the debt securities offerings that are necessary to implement the Plan. PG&E
&FABKJN
,.-q 0` 15 believes that the registration statements must be filed promptly in order to ensure that PG&E 16 can timely meet the conditions precedent to the effectiveness of the Plan. Finally, PG&E is 17 solvent and has sufficient cash to pay these expenses without causing any detriment to its 5
18 creditors.
19 20 21 22 23 24 25 26 27 5 As reflected in PG&E's August 2002 Monthly Operating Report, PG&E held more than $4.1 billion in cash reserves as of August 31, 2002.
28 MOTION FOR AUTHORITY TO PAY FILING FEES AND PRINTER'S COSTS 1 CONCLUSION 2 For all of the foregoing reasons, PG&E respectfully requests that the Court 3 approve the request set forth above to pay the filing fees and printer's costs in connection 4 with the filing of the registration statements with the SEC, and grant such other and further 5 relief as may be just and appropriate.
6 DATED: October 9,2002 7 Respectfully, 8 HOWARD, RICE, NEMEROVSKI, CANADY, FALK & RABKIN 9 A Professional Corporation 10 By:_ _ _ _ _ _
11 JANET A. NEXON 12 Attorneys for Debtor and Debtor in Possession PACIFIC GAS AND ELECTRIC COMPANY HOcRD 13 MICE NENMEg£Q4S cANAF1Y~
FAI.K 14
& RABKIN
" -"*-15 16 17 18 19 20 21 22 23 24 25 26 27 28 WD 100902/1-14199051120/10276311v3 MOTION FOR AUTHORITY TO PAY FILING FEES AND PRINTER'S COSTS