DRValue

Lol, we should probably start an Index Tracker Haven.

If PG&E issues $5b+ of new secured debt, then the existing unsecured debt becomes secured. https://www.bloomberg.com/news/articles/2018-11-14/any-pg-e-bankruptcy-would-pit-bonds-against-burnt-out-homes PG&E have sought up to $5.5b worth of DIP financing. It has also just got approval for $1.5b of that amount. https://www.thestreet.com/investing/stocks/pg-e-files-for-bankruptcy-protection-seeks-5-5-billion-in-dip-funding-14848011 Wall Street Journal says the DIP is secured. https://www.wsj.com/articles/pg-e-gets-court-ok-to-tap-1-5-billion-of-bankruptcy-loan-11548979436 I'm unsure if the DIP will be paid back out of cash flows as an amortizing loan as the bankruptcy process continues. But if the DIP loans hit $5b and are secured, I wonder if they would count as new debt for the purposes of determining whether unsecured would become secured? I haven't read the bond terms yet, but I doubt information about DIP financing would be in there?

https://investorsunite.org/top-ten-takeaways-from-5th-circuit-hearing-in-collins-v-mnuchin/ Thoughts on point 8 if the nws is ended administratively before ruling?

I don't understand this commons not so much meme. There's no receivership so common will exist. Aig common were diluted 92%. I don't know the ratio under moelis but I expect it to be very close if I work it out. That would be bad for shareholders from 2008 but not those whose average cost of $1.50. I guess it's possible for shareholders to be screwed and rewarded lol.

For those fires currently under investigation, do you know which may be attributed to PG&E or which are suspected? Good info. Also, Camp Fire is roughly 3 .3 times the number of structures and Tubbs was estimated to be $7b of liability, so an estimate of $23b seem fair?

I quite like the debt, but want it dirt cheap. I think it'll be OK in a restructure.

Ashtead is on my watch list, just waiting for the cycle to weaken and the price to fall. Fantastic business with amazing metrics. I imagine they merge / are bought out by URI at some point too.

In UK health and safety law, to prove you aren't liable you have to demonstrate that you did everything a reasonable person would, to mitigate the risk of the event happening. I'm sure there are plenty of laws similar around the world, and this is probably a principle used outside of health and safety. I bring this up because the judge's plan for wildfire prevention is almost certainly above what is reasonable relative to the risk imo. At this point in the cycle pg&e is the villain so must be punished, by everyone, even if it is unreasonable. I'm sure pragmatism will prevail once the initial anger fades. But there's no getting around pg&e's apparent poor record.

Thanks bud.

Does anyone know if there will be a webcast replay?

Ackman owns common and hedged with preferred. Icahn owned common, but afaik we don't know if he holds now. I'm not looking for warrant cancellation. I would assume on the moelis plan that they have at least spoken to investors about the issue price and capital raise mechanics before publishing. If this was a normal situation and businesses of this quality went to the market, and the market had certainty and confidence, then the common price would be much higher. A capital raise in that scenario wouldn't mean enormous losses for the common. For businesses of this quality I just can't shake the prospect of asymmetric returns. And even then i still have plenty of profit from my preferred position. As the prospects of recap and release went up, the common price went down. Couldn't resist.

If I'm the one doing the screwing, obviously yes. As a matter of principle your argument seems valid, but when I dig into the specifics I see a much different picture. The ones who truly got screwed here are those who held in 2008 and those who held in 2012, regardless of it they sold since then. The conservatorship and NWS were both blindside attacks, devastating whoever held shares at the time. On the other hand, right now we know that the companies need to raise a lot of money quickly, and that new common shares is a key part of that. Can you truly say that a hurricane "screws" someone who sees it on the radar and decides not to evacuate? The argument of "who says the government can't do another conservatorship/NWS?" also fails because those events already happened and cannot be undone. There can never be a guarantee that something similar will never happen again. This argument won't keep the new money away entirely, it will just drive the IPO price down even more to compensate the new buyers for that risk. If your idea of "making shareholders whole" involves a payout to only those who currently held shares, you're paying off those who bought recently and shafting those who were hit by the conservatorship or NWS and sold (especially those who were forced to sell). I see this far too often: clamoring for "justice" but then also invoking the "everything travels with the shares" argument. The first is a moral claim, the second legal, and they actually conflict with each other. Conflating the two is what leads to this particular cognitive dissonance. Put it this way: what do you think it would take for current shareholders to not feel screwed? And why would that make the new buyers feel better enough to overcome the fact that they are getting a smaller stake in FnF? Diluting the commons into the ground (with a $0.25 IPO price) while getting the prefs to par can also be twisted around as promoting justice: the (preferred) shareholders were made whole! Dilution is always a threat to a common shareholder. I actually agree with your points, especially regarding this potentially happening again as when this is all over, assuming a good outcome I'm considering buying the new preferred and it bothers me. But I guess this is a question of nuance. If treasury say today that the nws is over and they can retain earnings and will be released, what price do commons go to? $3, $5, 15x earnings? What's the dynamic for a capital raise then? 20pct discount to the new share price? That makes me think the dilution won't be too bad. Commons are still screwed compared to 2006 shares outstanding but the cause of that is illegal government action and unnecessary warrant issuance. A "Fair" treatment in that scenario to me is the govt keeping the warrants but the "existing" shareholders not going to effectively 0. You've got me relitigating now!

Yes you can, as long as the shareholders you screwed and the new shareholders are different. It happens all the time. Fair point. They've already been screwed anyway. If this was all done legally though, meaning no unnecessary warrants, no accounting fraud, no sweep and no overpriced prefs, shareholders would've taken a hit but not screwed imo. So that particular scenario is outside the norm. Man the government really worked the companies over. Makes you sick.

Would you mind being more clear here? As I said above, the government exercising the warrants dilutes the commons 5x no matter what the offering price is. If you think it's the low offering price that screws the commons, remember that a lower IPO price directly benefits the new buyers because they end up with more of the companies (by percentage) in the end. In that case, screwing the existing commons is actually an attractant to new money, not a deterrent. If existing shareholders are screwed, would you want to be a new shareholder? And thinking about this, this is why you hedge with some prefs ;D ;D

Would you mind being more clear here? As I said above, the government exercising the warrants dilutes the commons 5x no matter what the offering price is. If you think it's the low offering price that screws the commons, remember that a lower IPO price directly benefits the new buyers because they end up with more of the companies (by percentage) in the end. In that case, screwing the existing commons is actually an attractant to new money, not a deterrent. If existing shareholders are screwed, would you want to be a new shareholder?

I've read that Morgan Stanley put out a note that the judge may throw out the bankruptcy case as they aren't insolvent. This may explain the stock price movement.

I think we're re-litigating old points, and at this point you're either in or out. We're days away from the end after all this time, going over this again won't get us any closer to being right. But remember, you can't screw shareholders with the left hand and then ask for money with the right hand.

This'll be it. The plan includes parts that require legislation like a guarantee. Recap starts first then they get the legislation done.

Source? DJ?

Could be a good case for Cali legislating for black swans, which this appears to be.

Stock price action is a head scratcher. Leaked good news? I expect it to trade down on a ticker change, but can't explain the upward pressure.

No new news and a psychological $3 resistance.

Elliot management offered $4b in convertible bonds to stave off bankruptcy. Without seeing the terms, I'll assume they see value in the common. This is going to get very interesting.

https://www.sfchronicle.com/opinion/openforum/article/Open-Forum-SF-takeover-of-PG-E-would-make-things-13565697.php Union representative doesn't like the idea of San Francisco running pg&e. Another thought, a judge has ordered for pg&e to prevent wildfires that costs $150b+. it'll never happen but what would be the reaction of constituents if Cali ran pg&e and said no to the judge's order? Probably not good.

I expect we'll find out the plan or at least parts of it on Friday because the democrats will leak it with their narrative. If I was trump I'd tell the world the plan on Friday with my own narrative, if a response to that letter is mandatory.