California Governor Blasts PG&E’s Hedge Fund Picks for Its Board
(Bloomberg) -- California Governor Gavin Newsom urged bankrupt power giant PG&E Corp. to reconsider its picks for a board overhaul, saying the company is about to appoint hedge fund financiers and others who have little or no experience in California or the utility business.
Newsom, whose staff had been briefed on PG&E’s picks in the past week, said the company is “primed” to make appointments that include “out-of-state executives” and pressed it to consider a board that consists primarily of Californians with experience as regulators, safety experts and clean energy advocates. His letter comes as a Friday deadline nears for PG&E board nominations.
His remarks are the latest in an intensifying battle over who will lead PG&E out of the biggest utility bankruptcy in U.S. history. A group of investors -- Knighthead Capital Management, Redwood Capital Management and Abrams Capital Management -- that own about 10 percent of PG&E’s shares have been in discussions over the board for weeks. Other funds, individually represented by law firm Jones Day, have also been supporting those efforts. They’re squaring off against activist investor BlueMountain Capital Management, which put forth its own slate.
PG&E filed for bankruptcy in January while facing $30 billion in liabilities tied to wildfires that its equipment may have caused. The company promised a board overhaul as its power lines were probed for starting the deadliest wildfire in California history, killing 85 people last year.
With the potential board picks, PG&E “would send a clear message that it is prioritizing quick profits for Wall Street over public safety and reliable and affordable energy service,” Newsom said in his letter to interim Chief Executive Officer John Simon.
For its part, PG&E said in a statement that it recognizes the “serious concerns expressed by the Governor” and shares the “urgency for action.”
“We recognize the importance of adding perspectives to the board that will bring about the right changes in safety, as well as help address the serious operational and financial challenges the business faces,” PG&E said. The company has said it’s looking to replace the majority of its board with new, independent directors.
The utility has been forced to delay its deadline for director nominees multiple times amid negotiations with investors and other stakeholders.
BlueMountain said in a statement Thursday that it shares Newsom’s view that PG&E needs a board with experience in safety and utility operations, among other things. The company had proposed a slate including activist investor Jeff Ubben, former California Treasurer Phil Angelides and National Transportation Safety Board ex-chairman Christopher Hart, as well as former utility executives.
Ubben has, in turn, criticized PG&E for ignoring BlueMountain’s slate while negotiating with other shareholders behind closed doors.
©2019 Bloomberg L.P.