Reports: PG&E Prepared to File Bankruptcy in Wake of Wildfires
Credit to Author: Darrell Proctor| Date: Mon, 14 Jan 2019 03:37:19 +0000
Reports on Jan. 13 said giant California utility PG&E Corp. could notify its workers as soon as Jan. 14 that it’s preparing to file for bankruptcy. Bloomberg on Sunday said the San Francisco-based utility, which faces billions of dollars in liabilities as investigations into its role in a series of deadly wildfires continues, will notify officials it will fulfill a state law enacted in 2018 that requires the company to give workers 15 days’ notice of any change of control, including a bankruptcy filing.
Bloomberg cited people it said were familiar with the situation. PG&E on Sunday said the company does not comment on rumor or speculation.
Reuters, meanwhile, on Sunday reported that sources told the news service that PG&E is “in discussions with investment banks about a multibillion-dollar financing package to help navigate bankruptcy proceedings.”
Bloomberg reported that one of its sources said a notice to employees does not make certain a bankruptcy filing, and the company might not make a filing if its situation changes. If PG&E does provide notice to state officials, it could show the company is preparing to make a filing for Chapter 11 protection in the wake of its potential wildfire liabilities, depending on the outcome of investigations into whether the utility’s equipment was responsible for fires in 2017 and 2018 that left more than 100 people dead and burned hundreds of thousands of acres in California. Reports say the company could face as much as $30 billion in damages.
PG&E’s stock price has plummeted, with the company’s market value falling by more than 60% in the past two months. Moody’s on Jan. 10 cut the company’s credit rating to junk.
California Gov. Gavin Newsom in a Jan. 10 news conference said his office would have an announcement about PG&E’s situation within a few days; the governor said the issue was a priority for his office. Nathan Click, a spokesman for the governor, on Saturday said Newsom is “monitoring the situation very closely.”
Reuters on Sunday reported that its sources said PG&E “is in touch with large banks about so-called debtor-in-possession financing that could total between $3 billion and $5 billion.” Reuters reported that its sources said the exact figure is could wind up higher.
PG&E’s current lenders include JPMorgan Chase, Citigroup, and Bank of America.
Reuters reported that PG&E has a debt load of more than $18 billion, and said the company is expected to soon disclose a large financial charge related to liabilities resulting from catastrophic wildfires in November 2018. The utility faces several lawsuits related to the 2017-2018 wildfires, and in November acknowledged it could face “significant liability” above its insurance coverage if its equipment was discovered to have caused the fires.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).
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