(San Francisco, CA) - PG&E Corporation (NYSE: PCG) today closed a $1 billion loan agreement with GE Capital Structured Finance Group, as Lender and Co-Arranger, and Lehman Brothers as Lender, Administrative Agent, Lead Arranger, and Book Manager, to restructure the Corporation's debt and pay obligations on which it has defaulted.

The loans, secured by the Corporation's equity interest in its PG&E National Energy Group, LLC, have enabled the Corporation to pay its outstanding debt obligations on which the Corporation has defaulted or would default in the near future. The obligations that have been paid include: $501 million in payments to commercial paper holders, $434 million in borrowings under a revolving credit agreement, and $116 million owed to PG&E Corporation common shareholders for the defaulted fourth-quarter 2000 dividend.

The agreement also provides the lenders with options that, depending on certain factors, would allow them to acquire between 2 percent and 3 percent of the shares of PG&E National Energy Group, Inc. The term of the loan agreement is two years with an option by PG&E Corporation to extend it for an additional year.

"The defaults created the risk that the Corporation might face a bankruptcy in the near future," said Chairman, CEO and President Robert D. Glynn, Jr., "and bankruptcy of the Corporation would benefit no one."

Glynn emphasized that the financing would be repaid with PG&E Corporation shareholder dollars only. "Unlike the Utility's costs of procuring wholesale electricity for utility customers, this financing is a general corporate obligation of PG&E Corporation, and it will be repaid entirely with shareholder dollars," he said. "It has no impact on the rates the Utility's customers pay now or in the future."

As required by the loan agreement, the funds were used to repay substantially all outstanding debt, and the Corporation's fourth-quarter 2000 common stock dividend, on which the Corporation defaulted in January when it was due to be paid. The Corporation's Board of Directors declared the dividend in October of 2000. The payment became an outstanding obligation after the record date on December 15, 2000, and the failure to pay it represented a default, which the lenders required the Corporation to pay with the proceeds of the loan, as part of the agreement.

The loan agreement prohibits the Corporation from declaring or paying future common stock dividends until the loans are repaid. Dividend payments will be resumed when the Board of Directors determines that it is in the best interest of the Corporation to do so.

PG&E Corporation markets energy services and products throughout North America through its National Energy Group. PG&E Corporation's businesses also include Pacific Gas and Electric Company, the Northern and Central California utility that deliver natural gas and electricity to one in every 20 Americans.