Giant utility facing California wildfire claims explores bankruptcy, sources say

Camp Fire: PG&E gets sued by insurance companies

Camp Fire: PG&E gets sued by insurance companies

The company was considering the move, for some or all of its businesses, as it fears a massive charge in the fourth quarter related to potential liabilities from wildfires.

The potential for bankruptcy may pressure lawmakers to decide on whether to allow the company to pass some of the costs of the fire through to taxpayers, Katie Bays and Clayton Allen, analysts at Height Securities LLC said in a note on Monday.

Because of potential legislative aid, PG&E has not yet determined whether it will make a bankruptcy filing, Reuters reported.

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

Earlier on Monday, PG&E shares dived more than 22 percent and its largest bond, a $3 billion note due in March 2034 with a coupon of 6.05 percent, fell to a record-low bid price of 91.5 cents on the dollar, while its yield rose to almost 7 percent.

PG&E is also exploring selling its gas unit, potentially through a court-supervised auction during bankruptcy proceedings, one of the sources said.

The fire broke out on the morning of November 8 near the Northern California mountain community of Paradise, sweeping through the town and killing at least 86 people in the deadliest and most destructive wildfire in state history.

The company warned in a regulatory filing in November that it could face liabilities beyond its $1.4 billion insurance coverage if its equipment was found to have caused the Camp Fire. But the bill did not cover 2018 fires. And that's compounding financial woes the company was already facing after other fires destroyed parts of wine country a year earlier.

"The board is actively assessing PG&E's operations, finances, management, structure, and governance", the company said.

Dodd said findings of the regulator showed that the utility and its parent company, PG&E, need "systematic change", including on its board of directors "and in the executive suite", the newspaper had reported.

And Daniel Ford of UBS Group AG on Monday raised his 12-month price target for PG&E to US$29 from US$26, based on recent disclosures by the company asserting it is not responsible for the 2017 Tubbs fire, the second-most destructive in state history. It had amassed too much debt by buying electricity, which it was then not allowed to recoup by increasing rates for its customers.

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