PG&E plummets amid reports of possible bankruptcy
Shares in PG&E plummeted by over a fifth today as worries over its future gripped markets in the US.
The company dropped 20.9 per cent to $19.36 in early trading in New York as reports surfaced that it could be on the brink of bankruptcy.
The utility supplier is considering plans to file for bankruptcy protection as it faces massive charges from potential wildfire liabilities, Reuters reported on Friday.
Analysts estimate that potential liabilities from wildfires which ripped through California in 2017 and 2018 could cost the company between $24bn (£19bn) and $30bn.
However, sources said the bankruptcy filing – known as Chapter 11 – is far from certain as the company could get help through laws which allow it to pass on such costs to customers.
“Without adequate political and regulatory support, we cannot rule out a Chapter 11 filing,” said Christopher Turnure, an analyst at JP Morgan.
However, Guggenheim Partners analyst Shahriar Pourreza said PG&E is too big in California to be allowed to go bankrupt.
“Legislation is the way forward as it will allow to keep the utility alive and mitigate any negative impact one can get from the bankruptcy,” Pourreza said.
PG&E did not respond to request for comment from Reuters.
Several insurance companies have faced large bills from the wildfires.