PG&E talking with banks about multibillion dollar bankruptcy financing package

Andrew Cummings
January 14, 2019

JPMorgan downgraded the company on Monday, and noted in a report that the utility could be on the hook for more than $30 billion of liabilities.

That would dwarf the US$1.5 billion in cash and cash equivalents on hand as of Friday.

The company's board made a decision to oust CEO Geisha Williams and undergo a restructuring at a board meeting this weekend in San Francisco, according to a source familiar with the matter.

The 150-year-old company said: "We recognise that the devastating and unprecedented Northern California wildfires of 2017 and 2018 have had a profound impact on our customers and their communities".

PG&E's financial woes have already spread to the companies that supply its natural gas and generate electricity for its customers.

Pacific Gas and Energy Corporation (PG&E) said the fires, which devastated huge areas of California, had triggered "significant" potential liabilities.

The company's board of directors has named John Simon Interim Chief Executive Officer as the search for a new CEO continues. On Sunday, the company started searching for a new leader after Geisha Williams, 57, quit as CEO.

Richard Kelly, chairman of PG&E Corp., said a Chapter 11 filing "represents the only viable option to address to the company's responsibilities to its stakeholders". Shares were trading at almost $50 before the company disclosed that a faulty transmission tower may have caused the Camp Fire.

PG&E serves 5.4 million electric customers and 4.3 million natural gas customers in northern and central California.

Fire officials have not yet officially said what caused the blaze, but have focused on power equipment. 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 last week. "I value the opportunity I've had to lead PG&E and wish all of my colleagues well".

Williams was CEO for less than two years, but she had been with PG&E since 2007.

Gov. Gavin Newsom was quick to respond to the bankruptcy announcment, issuing a statement early Monday.

State fire investigators blamed the utility's power lines for causing a number of California wildfires in October 2017.

"PG&E faces extensive litigation and significant potential liabilities resulting from these wildfires". The Camp Fire killed 86 people and all but destroyed the town of Paradise.

-With assistance from David R. Baker and Peter Blumberg.

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