PG&E to file for bankruptcy amid massive forest fire liabilities
California utility company PG&E Corp. said Monday it will file for bankruptcy amid massive liabilities from numerous deadly forest fires. The stock fell the most on record following the news.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PCG | PG&E CORP. | 21.35 | +0.15 | +0.71% |
The announcement comes a day after the utility's CEO, Geisha Williams, resigned, The Wall Street Journal reported Monday. John Simon, the utility's general counsel, will serve as interim CEO.
Monday's announcement begins a 15-day advance notice legally required before an actual Chapter 11 filing can be made.
PG&E, which is facing billions of dollars in liabilities related to the wildfires that ravaged California, has had successful talks with large banks about debtor-in-possession (DIP) financing, which is used by companies that have filed for Chapter 11 bankruptcy protection to help reorganize and turn the company around.
"PG&E expects to have approximately $5.5 billion of committed DIP financing at the time it files for relief under Chapter 11 on or about January 29, 2019, and has received highly confident letters from a number of major banks," the company said in a Securities and Exchange Commission filing. "The DIP financing will provide PG&E with sufficient liquidity to fund the Company’s ongoing operations, including its ability to provide safe service to customers."
The utility also said that "the Chapter 11 process will, among other things, support the orderly, fair and expeditious resolution of its potential liabilities resulting from the 2017 and 2018 Northern California wildfires, and will assure the Company has access to the capital and resources it needs to continue to provide safe service to customers."
PG&E is facing lawsuits from the Camp Fire that occurred last year, as well as from a 2017 blaze. The Camp Fire that started in early November destroyed the town of Paradise, and killed at least 86 people. It is the deadliest and most destructive wildfire to have occurred in the state.
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A class-action lawsuit filed last month claims the company negligent in maintaining its electrical infrastructure and that the “catastrophic damage and loss of life was preventable.”
“PG&E’s failing infrastructure and its inadequate efforts to maintain its equipment and mitigate risk have caused tragedy before, and PG&E has been sanctioned a number of times for virtually identical misconduct,” the complaint said. “Despite notice of its past failures and even public reprimand, PG&E has continued to cut corners and put profits over safety, and continued to operate dangerous equipment without adequate risk management controls in place.”
Editor’s note: This story has been updated to include PG&E’s DIP financing + stock closing price 1-14-19.