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BlueMountain Capital Attacked PG&E Again, PG&E Fell 4%

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What’s next?

BlueMountain Capital Management, PG&E’s (PCG) shareholder, attacked PG&E’s board again. In a letter to shareholders, BlueMountain said that it plans to launch a “slate board” by February 21 to replace PG&E’s existing board. The letter also said, “There is no imminent financial crisis – there is a leadership crisis.”

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Bankruptcy plans

On January 14, PG&E said that it was preparing to file for Chapter 11 bankruptcy due to liabilities associated with the wildfires in 2017 and 2018. The liabilities from the wildfires in 2017 and 2018 are expected to be ~$30 billion. PG&E stock has fallen ~80% since the wildfires started on November 8. Broader utilities (XLU) were marginally down during the same period.

In an earlier letter, BlueMountain addressed PG&E’s board. BlueMountain said that PG&E was solvent and had enough liquidity to manage its operations, while its liabilities remained uncertain and contestable. In a second letter addressed to PG&E, BlueMountain said, “There is no imminent financial pressure; there is no justification for a hasty and heedless filing.”

PG&E stock has risen more than 25% in the last three trading sessions. After a fairly strong start on January 24, it has fallen ~4%. Even though PG&E stock has shown a notable surge recently, it continues to look risky.

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