PG&E shares plunge on bankruptcy worries

Daniel Fowler
January 8, 2019

Sources said the company could still receive financial help through legislation that would let it pass on to customers costs associated with fire liabilities, staving off a bankruptcy filing.

PG&E Corp, the electricity provider in the northern California region ravaged by a deadly wildfire, said it was searching for new directors at its holding company and its utility subsidiary Pacific Gas and Electric Co.

Investigators have not determined the cause of a massive wildfire that destroyed the town of Paradise in November.

PG&E did not respond to a request for comment.

The parent company of California's largest utility said Friday it is assessing its finances and structure in its effort to confront a growing liability threat from wildfires blamed on the company.

This follows Friday's report by Reuters saying the utility is considering the move for some or all of its businesses.

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PG&E, whose shares have lost almost half of their value since the wildfire, said it is working with a leading search firm to identify new directors and is interviewing several candidates.

The California attorney general told a judge last week that PG&E could face charges as serious as involuntary manslaughter or murder if investigators determine that reckless operation or maintenance of power equipment caused any recent wildfires in the state.

PG&E stock is falling again on Monday, as the shadow of California's wildfires continues to cloud the utility's future.

"Last year, they were able to fool the legislature with the narrative of bankruptcy or bailout, and the legislature gave them a bailout", said Hill, who represents the Bay Area city where a PG&E gas pipeline exploded in 2010, killing eight. "We argue bankruptcy may be a substantive solution for several of PCG's woes, and should be considered a credible risk by shareholders". But they added that "exploitive tactics and a reticence toward change will not improve" the company's profile. "We recognize the need to balance the interests of many stakeholders while maintaining safe, reliable, and affordable services for our customers, which is always our top priority".

"Breaking it up or the state running the company, those are all incredibly complicated proposals that just have no indication that they would be successful, certainly not anytime soon", he said. One option under consideration: Selling its natural gas business after a bankruptcy filing, the people familiar with the matter said.

"Without adequate political and regulatory support, we can not rule out a Chapter 11 filing", Christopher Turnure analyst at J.P. Morgan said in a note. The sale could also take place outside a bankruptcy process, the same source said.

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