Shares of Pacific Gas and Electric (PG&E), a US investor-owned utility company, slumped ~25% in Monday’s opening hour trade. This happened after CNBC reported that PG&E might face a minimum of $30 billion in liabilities excluding penalties, fines or punitive damages related to California wildfires in 2017 and 2018.
Further, with the utility company contemplating filing for bankruptcy protection as it anticipates a massive Q4 charge, investors started to abandon the stock that could worsen the company’s prospects.
PG&E is poised for its biggest fall since November 2014, when the stock was on the verge being downgraded to junk after it had announced the exhaustion of its revolving credit line.
Although the bankruptcy news hasn’t been confirmed by the company, according to sources familiar to the matter, the company is seriously contemplating the sale of its gas assets to cover liability costs related to the wildfires.
Further, with PG&E being a one of the biggest utility companies in California, many analysts expect the liability news to be good enough for PG&E to get a favorable rescue package from state legislators -- increasing the chance the utility can pass-on the costs related to wildfire liabilities to the customers.