A FIRE’S COSTS
California’s PG&E Corp. is filing for bankruptcy after wildfires left it with potential liabilities of $30 billion,
SAN FRANCISCO— PG&E Corp. said it will file for bankruptcy in California after the cost of wildfires left it with potential liabilities of $30 billion (U.S.) or more, gutting its share price and prompting the departure of its chief executive officer. The San Francisco-based company said it currently intends to reorganize under Chapter 11 of the U.S. bankruptcy code on or about Jan. 29 after giving the required 15-day notice to its employees, according to a filing at the Securities and Exchange Commission on Monday. On Sunday, the company started searching for a new leader after Geisha Williams, 57, quit as CEO. General counsel John Simon will take the helm in the meantime. The departure of Williams, who took over as CEO in March 2017, follows a catastrophic three months for PG&E.
The company has seen twothirds of its market value wiped out since November’s Camp Fire — the deadliest wildfire in California’s history. Its debt has been downgraded to junk and state regulators have called for a management shakeup. Investigators have been probing whether the power giant’s equipment ignited the fire, along with its potential liability for blazes that devastated California’s wine country in 2017 — costs that “could exceed $30 billion,” according to the filing.
That would dwarf the $1.5 billion in cash and cash equivalents on hand as of Friday. The board concluded that a Chapter 11 reorganization “is ultimately the only viable option to restore PG&E’s financial stability,” according to the filing. Shares of PG&E fell 42 per cent to $10.28 at 8 a.m., before the start of regular trading in New York.
The company’s deepening financial crisis has forced California regulators and policy- makers to consider a bailout package. The utility said bankruptcy was the best way forward for employees and those who are claiming losses from wildfires that may have been caused by its power lines.
A notice may signal that the company has accelerated plans to make a Chapter 11 filing as way of dealing with crippling liabilities from the wildfires of 2017 and 2018 that killed more than 100 people and destroyed hundreds of thousands of acres. It also puts pressure on California’s new governor, Gavin Newsom, and legislators to come up with a plan that could keep the utility solvent.