LOS ANGELES: California utility company Pacific Gas & Electric Co (PG&E) is exploring filing some or all of its business for bankruptcy protection as it faces billions of dollars in liabilities related to fatal wildfires in 2018 and 2017, people familiar with the matter said.
The company is considering the move as a contingency, in part because it could soon take a significant financial charge for the fourth quarter of 2018 related to liabilities from the blazes, the sources said.
A bankruptcy filing is not certain, the sources said. The company could receive financial help through legislation that would let it pass on to customers costs associated with fire liabilities, the sources said. But that is just a possibility, they said, so bankruptcy preparations are being made.
As of Friday, PG&E was shying away from negotiating so-called debtor-in-possession financing that companies typically line up before a bankruptcy filing to help keep operating while under court protection.
A bankruptcy filing is not PG&E’s preference for addressing liabilities from the catastrophic blazes, some of the sources said. But the preparations could put pressure on California politicians hoping the company can avoid such an outcome.
Shares of PG&E, which has a market capitalisation of $12.7 billion, dropped 30 per cent in after hours trading in New York on Friday on the news.
“PG&E’s board and management are working diligently to assess the company’s potential liabilities as a result of the wildfires and the options for addressing those liabilities. We recognise 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,” the company said in a statement.
PG&E is also exploring selling its gas unit, potentially through a court-supervised auction during bankruptcy proceedings, one of the sources said. The sale could also take place outside a bankruptcy process, the same source said.
The company is weighing using proceeds from the unit’s sale to address death and injury claims arising from the recent wildfires, this source said.
NPR first reported on the exploration of the gas unit sale earlier on Friday. PG&E, which filed for bankruptcy once before in 2001, said in November it could face “significant liability” in excess of its insurance coverage if its equipment was found to have caused last year’s fires in northern California.— Reuters
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