PG&E Corp. stock plunged nearly 50% in early morning trading as Wall Street reacts to news that the company and its subsidiary Pacific Gas and Electric Co., or PG&E, plan to seek federal bankruptcy protection.
PG&E Corp. stock was trading down more than 47% at about $9.20 at 10:30 a.m. ET on Jan. 14.
PG&E Corp. said in a Jan. 14 news release that the company and its utility PG&E have filed a 15-day advance notice that they intend to seek Chapter 11 reorganization on or about Jan. 29. The reorganization is expected to help PG&E Corp. and its utility resolve billions of dollars in potential liabilities as a result of the 2017 and 2018 Northern California wildfires, while continuing to provide service to customers.
The planned bankruptcy announcement follows news late Jan. 13 that Geisha Williams stepped down from her role as CEO.
"It appears the timing of a near-term bankruptcy is being driven behind the scenes by newly appointed [Gov. Gavin] Newsom rather than any pressing liquidity or covenant trigger," CreditSights analysts wrote in a Jan 14 report. "The sooner [PG&E] files, the easier it is for Governor Newson to rightfully distance himself from the issue by blaming it on events/regulations before he took office."
PG&E Corp. said the Chapter 11 process would not affect electric or natural gas service, and rehabilitation efforts in the wildfire-affected communities will continue as planned.
"We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion," PG&E interim CEO John Simon said.