PG&E talking to banks on multibillion dollar bankruptcy financing

Darnell Taylor
January 14, 2019

The company said it is providing California's required 15-day advance notice as it intends, "to file petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on or about January 29, 2019". State investigators found PG&E; lines were responsible for igniting 18 wildfires in October 2017, and are still probing whether the utility's equipment caused the devastating Camp Fire previous year.

The company has about $1.5 billion in cash heading into bankruptcy and is negotiating with lenders to get about $5.5 billion more in debtor-in-possession financing to stay in business and continue providing power and gas to millions of Californians, according to Reuters. Shares were trading at almost $50 before the company disclosed that a faulty transmission tower may have caused the Camp Fire. John Simon, the company' general counsel since 2017, will serve as interim chief executive.

The company's deepening financial crisis has forced California regulators and policy makers to consider a bailout package and PG&E.

"While PG&E announced its intent to file bankruptcy today, the company should continue to honor promises made to energy suppliers and to our community".

CPUC President Michael Picker has already taken the unusual step of personally calling Wall Street analysts in November to assure them that the agency was seeking multiple avenues to avoid a PG&E bankruptcy, including acting quickly on SB 901's provisions.

Wildfire legislation passed in September, SB 901, gives the California Public Utilities Commission the authority to allow utilities, including PG&E, to pass on some wildfire-related costs on to ratepayers through increased bills - a first for the state.

The Company does not expect any impact to electric or natural gas service for its customers as a result of the Chapter 11 process.

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In theory, California politicians could avert PG&E's bankruptcy with legislative action.

The company said it is looking for new members for its board of directors with safety experience. Investors might avoid the company if questions around that risk remain unanswered.

The cause of the Camp Fire is still under investigation, according to state fire officials.

A federal judge last week proposed restricting PG&E from using power lines deemed unsafe during high winds in this year's fire season. 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.

PG&E faces widespread lawsuits from that fire and one in 2017. 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.

This announcement comes a day after the company's CEO Geisha Williams resigned.

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