California PG&E bankruptcy looms, CEO to exit as fire costs dwarf cash
PG&E Corp. said it will file for bankruptcy in California after the cost of wildfires left it with potential liabilities of $30 billion or more, gutting its share price and prompting the departure of its chief executive officer. The San Francisco-based company said it 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 employees, according to a filing at the Securities and Exchange Commission Monday. On Sunday, the company started searching for a new leader after Geisha Williams, 57, resigned as chief executive officer. 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 two-thirds of its market value wiped out since the deadliest wildfire in California's history, called the Camp Fire, began in November. Its debt has been downgraded to junk, and state regulators have called for a management shakeup. Investigators are probing whether the power giant's equipment ignited that fire, along with blazes in 2017 that devastated Northern California's wine country. More than 100 people died in the fires. The costs "could exceed $30 billion," according to the company's filing.
That would dwarf the $1.5 billion in cash and cash equivalents on hand as of Friday. The board concluded 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 47 percent to $9.28 at 12:38 p.m. in New York, the most intraday since January 2001. The company's most active bonds fell more than 4 percent to 84.25 cents on the dollar. The bonds are the most actively traded this morning across all ratings, according to Trace.
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. California's new governor, Gavin Newsom, said in a statement Monday that his administration has been in constant contact wiPG&E, labor unions and regulators. "Everyone's immediate focus is, rightfully, on ensuring Californians have continuous, reliable and safe electric and gas service," he said.
https://m.sfgate.com/business/article/PG-E-plans-bankruptcy-filing-CEO-to-exit-as-fire-13531438.php
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