Ad Hoc Subrogation Group Files Plan Proposal to Resolve PG&E Chapter 11

The Ad Hoc Group of Subrogation Claim Holders ("Ad Hoc Subrogation Group") today filed a motion, as described below, which contains a proposal outlining the key terms of a potential plan of reorganization. If granted, the motion would advance the Chapter 11 cases of PG&E Corporation and Pacific Gas and Electric Company (together, "PG&E") and provide a viable path towards confirmation and emergence. The members of the Ad Hoc Subrogation Group hold more than $20 billion in unsecured claims against PG&E arising from the billions of dollars of insurance claims paid to California wildfire victims.

The proposal would hold PG&E accountable for wildfire liability, maintain price stability for PG&E's ratepayers, contribute billions of dollars to California's wildfire recovery fund, preserve jobs and retiree benefits, and enable PG&E to emerge from Chapter 11 financially able to invest in grid improvement and safety enhancement initiatives.

The Ad Hoc Subrogation Group believes that the framework of the proposal strikes the balance necessary to build consensus around a credible and confirmable plan ? under which all PG&E stakeholders would stand to benefit.

Importantly, under the Ad Hoc Subrogation Group's proposal, individual wildfire victims could assert their claims against a well-funded trust, providing the resources to help individual fire victims rebuild their homes and their lives. The Ad Hoc Subrogation Group is engaged in ongoing discussions with the Tort Claimants Committee on the total funding required and potential alignment on a joint proposal that would treat all wildfire victims fairly.

To facilitate a prompt, fair recovery to wildfire victims, expedite PG&E's Chapter 11 cases, and enhance the proposal's feasibility, the proposal provides that subrogation claims would be settled at an amount significantly less than full recovery and that a significant portion of the settlement would be in the form of equity. Subrogation is a legal process in which the members of the Ad Hoc Subrogation Group seek to recover from PG&E the cost of claims paid to customers affected by the wildfires. This process helps control insurer costs and in many cases helps facilitate reimbursement of customer-paid deductibles associated with the loss.

Significant features and benefits of the Ad Hoc Subrogation Group's proposal include:

• Individual wildfire victims would receive a prompt, fair recovery. The proposal provides for (i) payment of compensable individual wildfire claims from a well-funded settlement trust and (ii) a $5 billion contribution to the proposed recovery fund for future wildfire claims. Importantly, the proposal is designed to accommodate a much higher distribution to individual wildfire victims than the plan proposed by the Ad Hoc Bondholder Group;
• Subrogation claims would be settled at an amount significantly less than full recovery. Further, under the proposal, the Ad Hoc Subrogation Group would receive 90% of its settlement in the form of mandatory convertible preferred equity securities in PG&E, thereby reducing the amount of new money necessary for PG&E to exit Chapter 11;
• Rate neutrality would be maintained for all of the utility's customers, with ratepayers benefiting from a safer and more reliable network in line with California's renewable energy standards;
• Safety would be prioritized, with the proposal including specific provisions to make wildfire prevention and mitigation a top priority for reorganized PG&E;
• Employee and retiree jobs and benefits would be preserved, including through assumption of PG&E's existing retirement plan;
• PG&E's balance sheet would be strengthened upon emergence from Chapter 11, allowing a reorganized PG&E to maintain an investment grade rating and positioning it to maintain compliance with California's climate goals and invest in requisite grid improvement and safety enhancement initiatives;
• PG&E's potential emergence capital needs would be addressed, with existing equity holders presented with the option to invest in reorganized PG&E through a rights offering if they agree to support the plan on a timely basis; and
• Reinstated funded debt claims against PG&E would be against an investment grade issuer, and general unsecured claims, such as trade claims, would be paid in full or reinstated.

The Ad Hoc Subrogation Group believes that allowing this proposal to proceed, when coupled with the granting of a motion to enable the parties to litigate PG&E's liability on account of the Tubbs fire in state court, presents the best opportunity to successfully resolve the Chapter 11 cases by the June 2020 deadline for participating in the insurance wildfire fund and expedite distributions to wildfire victims. The Ad Hoc Subrogation Group intends to continue negotiations with the Tort Claimants Committee, PG&E, and other stakeholders in an attempt to achieve a consensual resolution.

About the Ad Hoc Group of Subrogation Claim Holders

The members of the Ad Hoc Subrogation Group hold more than $20 billion in unsecured claims against PG&E arising from the billions of dollars of insurance claims paid to California wildfire victims.

About the Motion

The Ad Hoc Subrogation Group has filed a motion with the bankruptcy court seeking permission to terminate PG&E's exclusive right to file a plan and attached a term sheet outlining the key terms of the potential plan of reorganization. At present, and unless and until exclusivity is terminated, only PG&E has the exclusive right to file and pursue a plan of reorganization.

This release is not intended to be nor shall constitute an offer with respect to any securities or a solicitation of acceptances or rejections as to any Chapter 11 plan of reorganization, it being understood that such a solicitation, if any, would only be made in compliance with applicable provisions of securities, bankruptcy and/or other applicable law. This release does not address all terms that would be required in connection with any potential transaction referenced herein, and there can be no assurance that PG&E or any of its stakeholders would agree to the terms or conditions of the Ad Hoc Subrogation Group's proposal.