PG&E to Discuss New Board Appointments With BlueMountain

(Bloomberg) -- Bankrupt utility giant PG&E Corp. is talking with one of its investors about potentially bolstering the board it announced last week with different nominees, according to people familiar with the matter.

BlueMountain Capital Management is in discussions about potentially replacing some of the three incumbent directors on the 13-member board, said the people, who asked not to be identified because the talks weren’t public. The investment firm, which owns a 2.5 percent stake in the company, had nominated its own directors who were passed over in favor of a slate organized in partnership with another group of investors last week.

New York-based BlueMountain efforts could address concerns expressed by California Governor Gavin Newsom that the board appointments announced last week lacked the necessary expertise.

Talks are ongoing and there is no guarantee an agreement can be reached to see any of BlueMountain’s nominees join the board, the people said.

Representatives for PG&E and BlueMountain declined to comment.

PG&E reached an agreement last week with a group of investors -- Knighthead Capital Management, Redwood Capital Management and Abrams Capital Management -- that saw 10 new directors appointed to the board alongside the three incumbents. It also saw PG&E appoint former Tennessee Valley Authority chief Bill Johnson appointed as its new CEO. Johnson is set to join the board as a 14th member at a later date, subject to a shareholder vote.

Nathan Click, a spokesman for Newsom, said the governor was concerned about the large number of Wall Street interests on the PG&E board announced last week, and the lack of experience in California. He said the state would hold PG&E to the highest standards.

BlueMountain has said it doesn’t believe a proxy fight at PG&E was in the best interest of Californians or the utility. It has urged the company to appoint directors with expertise in safety and risk management, utility operations, clean energy as well as California business and policy.

Newsom is due within days to issue a report on how the state should deal with PG&E’s bankruptcy and increasingly extreme wildfire seasons that have saddled utilities with billions of dollars in liabilities.

--With assistance from Mark Chediak.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Lynn Doan

©2019 Bloomberg L.P.