US util­ity gi­ant bankrupted by wild­fire claims

The Star Malaysia - StarBiz - - Foreign News -

SAN FRAN­CISCO: PG&E Corp, the Cal­i­for­nia util­ity gi­ant fac­ing bil­lions of dol­lars in wild­fire li­a­bil­i­ties, may no­tify em­ploy­ees as soon as to­day that it’s pre­par­ing a po­ten­tial bank­ruptcy fil­ing, ac­cord­ing to peo­ple fa­mil­iar with the sit­u­a­tion.

The San Fran­cisco-based util­ity owner is plan­ning to send the no­tice to ful­fill a state law that re­quires the com­pany to alert work­ers at least 15 days be­fore a change of con­trol, said the peo­ple, ask­ing not to be iden­ti­fied be­cause the in­for­ma­tion isn’t pub­lic. The no­tice wouldn’t nec­es­sar­ily make a bank­ruptcy fil­ing cer­tain and the com­pany could still de­cide not to if its sit­u­a­tion changes, one of the peo­ple said.

PG&E de­clined to pro­vide a state­ment, say­ing the com­pany doesn’t com­ment on ru­mor or spec­u­la­tion.

A no­tice may sig­nal that the com­pany has ac­cel­er­ated plans to make a Chap­ter 11 fil­ing as way of deal­ing with crip­pling li­a­bil­i­ties from wild­fires that tore through Cal­i­for­nia in 2017 and 2018, killing over 100 peo­ple and de­stroy­ing hun­dreds of thou­sands of acres.

In­ves­ti­ga­tors are prob­ing whether PG&E’s equip­ment ig­nited the dead­li­est of the blazes.

The com­pany is fac­ing as much as US$30bil in dam­ages - a prospect that has wiped out two-thirds of PG&E’s mar­ket value, sent its bonds plum­met­ing to record lows and prompted rat­ing com­pa­nies to down­grade PG&E’s debt to junk.

Cal­i­for­nia passed leg­is­la­tion last year in the af­ter­math of the deadly Wine Coun­try fires re­quir­ing util­i­ties to post pub­lic no­tices for em­ploy­ees at least 15 days be­fore a change of con­trol, in­clud­ing a bank­ruptcy fil­ing.

Cal­i­for­nia Gov­er­nor Gavin New­som said dur­ing a press con­fer­ence on Thurs­day that his of­fice would be mak­ing an an­nounce­ment re­lated to PG&E within the next few days and that the is­sue was at the top of his agenda.

He said in a later in­ter­view that the an­nounce­ment would in­volve ap­point­ments to the Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion, the state’s grid op­er­a­tor and to a com­mis­sion es­tab­lished by leg­is­la­ture to ex­plore wild­fire is­sues. New­som’s of­fice didn’t im­me­di­ately re­spond to a re­quest for com­ment on Satur­day.

PG&E’s deep­en­ing fi­nan­cial cri­sis has al­ready spread to the com­pa­nies that sup­ply its nat­u­ral gas and gen­er­ate elec­tric­ity for its cus­tomers.

At least two small gas sup­pli­ers have re­stricted sales to PG&E out of con­cern that the com­pany won’t be able to pay, peo­ple with di­rect knowl­edge of the sit­u­a­tion said ear­lier this week.

Some banks are tak­ing a long look at a po­ten­tial US$2bil debt fi­nanc­ing for the Gey­sers, the world’s largest geo­ther­mal com­plex, be­cause it sup­plies the util­ity, peo­ple fa­mil­iar with the mat­ter also said this week.

On Thurs­day, S&P Global Rat­ings cut the credit rat­ing of Berk­shire Hath­away En­ergy’s 550-megawatt Topaz So­lar Farms to junk, not­ing that the plant counts on PG&E for all of its rev­enue.

Peo­ple fa­mil­iar with PG&E’s sit­u­a­tion said last week that the com­pany is con­sid­er­ing fil­ing for bank­ruptcy within weeks. — Bloomberg

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