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PG&E Files for Chapter 11 Bankruptcy, Stock Rises 5%

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Jan. 29 2019, Updated 11:44 a.m. ET

PCG stock continues to rise

On January 29, wildfire-stricken PG&E (PCG) filed for voluntary Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of California. The utility faces ~$30 billion in potential liabilities associated with wildfires in 2017 and 2018. PG&E stock has risen 5% on January 29.

“Camp Fire,” which killed  86 people, was the deadliest wildfire in California’s history. PG&E serves 16 million people in California. The company said that it doesn’t expect the bankruptcy proceeding to impact its electric and gas services.

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BlueMountain continues its dissent

In a press release on January 29, BlueMountain Capital Management said that it’s deeply disappointed that PG&E’s board ignored calls from multiple parties to abandon its reckless and irresponsible plan to file for bankruptcy. In an earlier letter to shareholders, BlueMountain Capital Management said that it plans to launch a “slate board” by February 21 to replace PG&E’s existing board.

According to a report by Reuters, on January 28, the California Public Utilities Commission gave PG&E the green light to obtain up to $6.0 billion in debtor-in-possession financing for its bankruptcy.

PG&E stock rose 75% intraday on January 24 after Cal Fire cleared PG&E from the “Tubbs Fire” last year. The Tubbs Fire killed 22 people and burned more than 5,600 structures. PG&E has fallen almost 80% in the last three months since the wildfires started, while broader utilities (XLU) (IDU) were largely flat during this period.

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