PG&E Corp intensifies preparations for bankruptcy proceedings after California wildfire

PG&E Corp intensifies preparations for bankruptcy proceedings after California wildfire

 

PG&E Corp, the California based utility owner is in talks with lenders about a multibillion-dollar financing package to help it through bankruptcy proceedings. Reports from different quarters show that increasing liabilities incurred from the deadly wildfire may make the company file for a chapter 11 quite soon.

 

The California Company is already discussing with large banks for debtor-in-possession financing to the tune of $3 billion and $5 billion. It’s uncertain what the excat figures will be, said sources with a knowledge of the issue.

 

PG&E Corp is yet to comment on the issue.

 

The company may alert employees as soon as Monday about its preparations for a potential bankruptcy filing in compliance with a state law about providing notice at least 15 days before such an event, one of the people said.

 

The plans have not been finalized and the communication could come later, the source said. Bloomberg first reported that the notice could come as soon as Monday.

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Companies negotiate debtor-in-possession loans, often with existing lenders, when they are seriously considering bankruptcy protection so they can continue operations while working through court proceedings.

 

PG&E’s existing lenders include Citigroup Inc, JPMorgan Chase & Co and Bank of America Corp.

 

A bankruptcy filing is not assured, the sources said. PG&E’s discussions with banks about financing are in the early stages and part of contingency planning if other efforts to address woes from last year’s wildfire fail, they said.

 

A bankruptcy filing would represent a last resort if the company is unable to get government relief that would allow it to pass on liabilities to customers, a maneuver enacted into law to help the company grapple with 2017 fires, the sources added.

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If it seeks bankruptcy protection, the new money could prove critical for PG&E, which spends roughly $6 billion annually serving millions of electric and natural gas customers in California.

 

PG&E, which carries a hefty debt load of more than $18 billion, is expected to soon disclose a large financial charge related to liabilities resulting from catastrophic November blazes. One, the Camp Fire, swept through the mountain community of Paradise and killed at least 86 people, the deadliest and most destructive blaze in state history.

 

PG&E faces widespread lawsuits from that fire and one in 2017. In November, the company warned it could face ‘significant liability’ in excess of its insurance coverage if its equipment was found to have caused last year’s blazes.

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