California power producer PG&E Corp said on Friday it has reached an $11 billion settlement with entities representing about 85% percent of insurance subrogation claims relating to 2017 and 2018 wildfires.
These claims were based on payments made by insurance companies to individuals and businesses with coverage for wildfire damages, the company said, adding it has amended the equity financing agreements to settle the claims.
The Ad Hoc Subrogation Group, which represents the entities, said the proposed settlement does not fully satisfy the $20 billion claims that it holds.
“This compromise will pave the way for a plan of reorganization that allows PG&E to fairly compensate all victims and emerge from Chapter 11 by the June 2020 legislative deadline,” the group said in a statement.
This is the second major settlement of wildfire claims by PG&E. In June, the company and 18 local public entities decided to settle their claims totaling $1 billion relating to the 2015, 2017, and 2018 wildfires.
PG&E said proceedings on the third and final major group of wildfire claims were pending in both Federal District Court and State Court.
The company unveiled the outlines of a reorganization plan on Monday that will pay $17.9 billion for claims stemming from the wildfires that pushed it to seek bankruptcy protection in January.
The plan filed in U.S. Bankruptcy Court in San Francisco includes payments capped at $8.4 billion for wildfire victims, payments capped at $8.5 billion for reimbursing insurers that had paid victims and a $1 billion settlement with local governments.
Shares of the company up ~12% in before the bell trading.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Arun Koyyur)