(Reuters) – PG&E Corp (PCG.N), the biggest U.S. power utility, said on Monday it is preparing to file for Chapter 11 bankruptcy for all of its businesses as it faces potentially crushing liabilities linked to catastrophic wildfires in 2017 and 2018.
FILE PHOTO: PG&E works on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo
The company’s shares tumbled 55 percent in early trading.
PG&E faces widespread litigation, government investigations and liabilities that could potentially reach $30 billion, according to the company, accounting for damage from fires last year and in 2017.
PG&E, the biggest power company in the United States with customers, said it planned to file for bankruptcy protection around Jan. 29, and was giving employees a 15-day notice to employees to comply with California law.
PG&E said on Sunday its chief executive officer was leaving and being replaced by General Counsel John Simon on an interim basis.
The utility holding company said it did not see any impact to electric or natural gas services for its customers as a result of a bankruptcy.
PG&E is reeling from the November Camp fire that swept through the California mountain community of Paradise and killed at least 86 people in the deadliest and most destructive blaze in state history.
PG&E expects the Chapter 11 process will “support the orderly, fair and expeditious resolution of its potential liabilities resulting from the 2017 and 2018 Northern California wildfires.”
PG&E said it is in discussions with lenders about receiving
roughly $5.5 billion in debtor-in-possession financing to help it operate while navigating through bankruptcy. It has access to about $1.5 billion in existing cash.
The company’s board decided to oust CEO Geisha Williams and undergo a restructuring at a board meeting this weekend in San Francisco, according to a source familiar with the matter.
Advisers said they expect it may take up to two years for the company to emerge from bankruptcy.
The company has been under pressure from the California Public Utilities Commission to make operational changes. It said on Jan. 3 it was reviewing its structural options and looking for new directors with safety experience.
Board Chairman Richard Kelly said “a Chapter 11 reorganization for both the utility and PG&E Corporation represents the only viable option to address the company’s responsibilities to its stakeholders.”
PG&E serves 5.4 million electric customers and 4.3 million natural gas customers in northern and central California.By filing for bankruptcy, the company will be able to work with “wildfire victims, customers, employees, creditors, shareholders, the financial community and business partners,” in one court-supervised process, it said.
Law firms Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP are its legal advisers while Lazard is its financial adviser and AlixPartners LLP is its restructuring adviser.
Reporting by Liana B. Baker and Mike Spector in New York; Additional reporting by Scott Disavino in New York and Laharee Chatterjee in Bengaluru; Editing by Anil D’Silva and Jeffrey Benkoe