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PG&E shares surge as company secures $5.5 billion in bankruptcy financing

FILE PHOTO: A PG&E truck carrying an American Flag drives past PG&E repair trucks in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage

(Reuters) - U.S. power producer PG&E Corp's (PCG.N) shares surged as much as 16 percent on Tuesday after it said it had secured $5.5 billion(£4.2 billion) in debtor-in-possession (DIP) financing from four banks as it prepares to file for Chapter 11 bankruptcy protection.

The financing will comprise a $3.5 billion revolving credit facility, a $1.5 billion term loan and a $500 million delayed-draw term loan.

Investment banks JPMorgan Chase & Co (JPM.N), Bank of America Merrill Lynch (BAC.N), Barclays Plc (BARC.L) and Citigroup Inc (C.N) will provide financing, the company said in a filing. ( https://bit.ly/2MoM4NX )

It expects to file for bankruptcy on or about Jan. 29.

Separately on Tuesday, PG&E shareholder BlueMountain Capital Management LLC urged the power producer to delay its plans to file for bankruptcy. ( http://bit.ly/2sOTn8N )

The asset manager, which owns about 11 million shares in PG&E, or about 2.1 percent of the company, had said last week filing for bankruptcy protection was unnecessary.

PG&E, which provides electricity and natural gas to 16 million customers in northern and central California, faces widespread litigation, government investigations and liabilities that could potentially exceed $30 billion because of wildfires in the state.

Its shares were last up about 9 percent on Tuesday afternoon.

(Reporting by Debroop Roy in Bengaluru; Editing by Shinjini Ganguli)