Pacific Gas & Electric has been sparking the market with at least $10 million changing hands last week in the 107-108 range after California Public Utilities Commission proposed an alternative reorganization plan last Monday. Dealers explained the plans proposed by the company and by the state regulators both offer bank investors 100% return on principle plus 8% interest. "People think it's a bulletproof piece of paper," one trader said. The name is reported to have been active in the secondary market over the last month.
The company reorganization plan would spin off 70% of the utility's assets. The CPUC plan would keep the company together and also attempts to mitigate the effect that the utility holding company's path out of bankruptcy will have in rising electric rates. The name began its trip to heights above par from the 97-98 range in early February after the market first digested the company's proposed plan with the accrued interest clause for the bank debt (LMW, 2/4). Gabe Togneri, v.p. of investor relations for PG&E, said that the company expects the bankruptcy court to approve its disclosure statement on April 24 and within 10 days financial holders will receive the accrued interest. The repayment of principal will come after the implementation of the plan is completed.