Lehman Raises PG&E Rating
Lehman Brothers upgraded its investment rating on shares of PG&E Corp. (PCG ) to overweight from equal-weight. Analyst Daniel Ford believes the Aug. 30 appellate court preemption ruling increases the utility's leverage in the company's bankruptcy process. While the California Public Utilities Commission is likely to appeal the decision, Ford thinks this appellate court ruling materially strengthens PCG's reorganization plan, and could maximize the leverage of the plan in any settlement discussion. He notes the company announced a partial restructuring of the holding company loan, including repayment of $606 million owed to GE. Ford believes a further restructuring of a $420 million loan could include equity grants. He is keeping his $15 price target.
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