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Sunday, March 17, 2019 10:07:56 AM
When all these Hedge Funds are working closely with the management. Do shorts still think PCG shares are going to zero. If the Board is strong we are easily breaking 20,may be even 21 pps.
PG&E Close to Naming New CEO, New Board
3/16/19 3:16 PM ET (Dow Jones)Print
By Russell Gold, Juliet Chung and Katherine Blunt
PG&E Corp. is likely to name Bill Johnson, retiring head of the Tennessee Valley Authority, as its new chief executive as early as next week and to announce an overhaul of its board backed by some of its largest investors, according to people familiar with the matter.
Mr. Johnson would take the reins of the troubled California utility, operating under federal bankruptcy protection as it faces a fight to survive billions of dollars in potential liability costs from deadly wildfires. While he is the front-runner for the job, his new role hasn't been finalized and other candidates were still being interviewed to ensure he was the best choice, one person said.
PG&E has made offers to 10 new independent board candidates and is expected to unveil the slate as soon as next week, saying it has significant shareholder support, people familiar with the matter said. The company vowed to remake its board after criticism of its safety practices in the wake of the wildfires.
A trio of activist investors has been working with PG&E to change its management, according to regulatory filings made Friday and to people familiar with the matter. Three hedge funds -- Abrams Capital Management LP, Knighthead Capital Management LLC and Redwood Capital Management LLC -- together own 9.8% of the company's stock, the filings said.
The board slate they have helped PG&E assemble is expected to include experts on cybersecurity, nuclear security and restructurings, people familiar with the matter said. The turnaround experts would be expected to cycle off the board as the company exits bankruptcy. Abrams, Knighthead and Redwood are represented by Jones Day, which represents company shareholders holding another 30% of the company's stock, said people familiar with the matter.
The efforts are separate from those of hedge fund BlueMountain Capital Management, which has put forward a different board slate including former utility executives, a former California state treasurer and activist investor Jeffrey Ubben of ValueAct Capital Management LP. PG&E's annual meeting is set to take place in May.
California's largest utility sought chapter 11 bankruptcy protection in January, citing potential liability costs topping $30 billion. State fire investigators have found the company's equipment sparked more than a dozen wildfires in recent years. PG&E now confronts a complex financial restructuring process expected to take years.
Mr. Johnson, 65, has been set to step down from the TVA in April. He is perhaps best known for serving as CEO of Duke Energy Corp. for a single day in 2012, after the utility he was then heading, Progress Energy Inc., merged with Duke. Hours after he assumed the job, he was abruptly ousted by the combined company's board.
Bloomberg reported earlier this week that Mr. Johnson had emerged as PG&E's top choice. The 10 board candidates PG&E has selected have accepted but are still being vetted, people familiar with the matter said.
Mr. Johnson didn't respond to requests for comment. PG&E declined to comment.
PG&E has been searching for a new chief executive since Geisha Williams stepped down in January. John Simon, PG&E's general counsel, is serving as CEO in the interim. In a letter to employees last week, Mr. Simon wrote that "no decision has been made."
The company approached longtime executives at other utilities about the vacant CEO job, according to people familiar with the matter. They included John Young, who held several leadership positions within Exelon Corp. before becoming chief executive of Energy Future Holdings Corp. in 2008.
Mr. Young, who retired in 2016 and now serves on Exelon's board, declined to comment.
Earlier this week, Michael Picker, chairman of the California Public Utilities Commission, told Mr. Simon that a board without sufficient safety experience was "simply unacceptable," according to a regulatory filing disclosing the conversation. Mr. Simon said the board should have a "broad mix of skills, including significant safety experience and a commitment to implementing California energy policy."
Mr. Johnson is a veteran utility executive. Since 2013, he has led the Tennessee Valley Authority, a public power company that provides electricity to about nine million customers in parts of seven southern states. He announced last year he was retiring from the TVA in 2019.
Richard Howorth, chairman of the TVA board, praised him for taking the federally chartered power company to its lowest debt level in a quarter-century, fixing its pension program and reducing operating and maintenance costs by $800 million. "A great performance, and he'd be the first to credit everyone else, but I've seen great leadership," Mr. Howorth said.
Mr. Johnson's tenure at the TVA began after he lost the struggle to run Duke after it and Progress completed their $26 billion merger in 2012.
He had risen through the ranks of Progress, and was set to be the CEO of the combined North Carolina utilities, with Duke head Jim Rogers becoming the nonexecutive chairman. But a few hours after he assumed the post, the company's board informed him it had changed its mind and reinstated Mr. Rogers as head of the combined company. Mr. Rogers, who retired in 2013, died last year.
At Progress and TVA, Mr. Johnson was known for his focus on operations. At TVA, he oversaw the opening of a new unit of the Watts Bar nuclear power plant. Construction of the unit had begun in the 1970s and then stalled for more than two decades.
He would face a steep challenge at PG&E. The company's role in sparking wildfires has battered its standing with the public as well as with state lawmakers and regulators, who now are debating whether to breaking up the company, as well as proposals aimed at improving its safety and operations.
Write to Russell Gold at russell.gold@wsj.com, Juliet Chung at juliet.chung@wsj.com and Katherine Blunt at Katherine.Blunt@wsj.com
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