PG&E shares plunge on bankruptcy worries

PG&E shares plunge on bankruptcy worries

It's a unsafe game, though, as Monday's market reaction showed. The stock fell 21% by midday Monday. The bonds are now the most active in the investment-grade market.

PG&E (NYSE:PCG) -26.2% after-hours following a Reuters report that it is considering filing for bankruptcy protection for some or all of its businesses, as it faces billions of dollars in potential liabilities related to California wildfires in 2017-18. Two analysts called the idea an "exploitive" tactic that won't help PG&E's profile.

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

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

Cal Fire is now conducting an investigation into the cause of the Camp Fire.

The company could face murder or manslaughter charges if it were found responsible for causing the state's recent deadly wildfires, according to court documents filed by California's attorney general. The shares were down 22 per cent to US$19.04 at 2:28 p.m.

In weighing a bankruptcy, power giant PG&E Corp. may be firing a warning shot to California lawmakers: Help us or watch the largest utility in your state go insolvent.

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Allstate Insurance, State Farm, and USAA have each filed lawsuits against Pacific Gas and Electric (PG&E). The company could be engaged in similar brinkmanship now, he said.

A federal judge overseeing a case that resulted in a criminal conviction for the company following a 2010 pipeline explosion has asked PG&E to explain any role it may have had in the Camp Fire. "Last year, they were able to fool the legislature with the narrative of bankruptcy or bailout, and the legislature gave them a bailout".

A bankruptcy filing is not certain, the sources said. Lawmakers declined, but they allowed the company to pass along some of the costs from the 2017 fires to its customers in hopes of sparing it from bankruptcy. "We argue bankruptcy may be a substantive solution for several of PCG's woes, and should be considered a credible risk by shareholders".

PG&E announced the assessment of its finances in a news release that did not elaborate on any potential plans. "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".

A bankruptcy filing is not PG&E's preference for addressing liabilities from the catastrophic blazes, some of the sources said.

The prospect of a state takeover may not offer a panacea, Bloomberg Intelligence analyst Kit Konolige said. But that is just a possibility, they said, so bankruptcy preparations are being made. "The assumption that whatever you put in place of PG&E would be better - that's really unproven".

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