PG&E Corporation 5.50% Equity Units (PCGU)

The PG&E Corporation 5.50% Equity Units were sold in late June 2020 as part of the financing that allowed the utility holding company to emerge from its Chapter 11 case tied to California wildfire liabilities. Each unit had a stated amount of $100 and combined a prepaid stock purchase contract with an interest in a portfolio of zero-coupon U.S. Treasury strips, which funded quarterly payments equal to 5.50 percent a year. About 14.5 million units were sold, raising roughly $1.19 billion, and they traded on the NYSE as PCGU.

The purchase contract set how many PG&E common shares each unit would turn into. If PG&E stock was at or below about $9.50 at settlement, each unit would receive the maximum 10.5263 shares; at or above about $11.64, it would receive the minimum 8.5929 shares, with a sliding scale in between. This gave holders a stock-like investment with extra income in exchange for giving up some of the upside.

The contracts settled automatically on August 16, 2023. Each unit was converted into PG&E common stock under the settlement formula, the final Treasury-funded payment was made, and the units stopped trading on the NYSE. Former unit holders now hold PG&E common shares, which trade as PCG. The settlement completed one of the equity pieces of the company's post-bankruptcy financing, and it added a large block of new shares to the PG&E share count.