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(Bloomberg) – The shares of PG & E Corp. dropped after a judge ruled that a jury could determine if he was to pay up to $ 18 billion in damages for the victims of the fires.
The Californian utilities giant fell 29% to 10.11 dollars in New York on Monday. This is the largest decline in intraday since the company announced its intention to file for bankruptcy in mid-January. PG & E's obligations have also decreased.
On Friday, US bankruptcy judge Dennis Montali lifted the blockage of the Tubbs fire lawsuits in 2017, which killed 22 people and destroyed more than 5,600 buildings in Sonoma and Napa counties. . This decision opens the door for victims who take legal action against PG & E to prepare for a trial.
"It was a bit out of the left field that the judge allowed the Tubbs case dispute to appeal to an outside jury," said Kit Konolige, a Bloomberg Intelligence analyst, in an interview. . "It's a big negative surprise."
& # 39; Too risky & # 39;
The judge's decision is the latest bad news for PG & E, which called for Chapter 11 at the end of January, facing tens of billions of dollars in debt from a deadly fire whose equipment is suspected. Last week, a court-appointed compliance monitor said PG & E had failed to properly cut down trees in areas at risk of fire. At the same time, a judge forced the company to react to a Wall Street Journal article that the company had delayed maintenance of equipment near the ignition point of California's deadliest fire.
Citigroup Inc. downgraded PG & E's shares to "sell" them and lowered its price target from $ 33 to $ 4, pointing out that Tubbs' claims could inflate the $ 15 billion liability , against an initial estimate of $ 1 billion to $ 2 billion.
Tubbs' fire risk is "too big" and a jury trial in California is "too risky," commented Praful Mehta, a utility analyst at Citigroup, in a note to his clients.
In a separate decision Friday, Montali sided with the public service and rejected requests from two groups of creditors who wanted to propose their own ways of restructuring the company. Montali said that opening bankruptcy to competing projects at this stage would have led to "costly, lengthy and uncertain conflicts" that would not benefit the victims of the fires.
Private system
PG & E has announced its intention to exit the biggest bankruptcy of public services in US history, promising to largely protect the value of its shares. The company has announced its intention to file its proposal by September 9th.
A few days before the bankruptcy of the company, California fire officials said that the utility had not caused the Tubbs fire in 2017. Instead, investigators decided that the electrical system private near a house near Calistoga had caused this explosion.
But lawyers for a group of victims and insurance companies who have paid damages have challenged the state's findings in bankruptcy court documents. They claim that their evidence indicates that the fire was triggered by the PG & E equipment and wish that a jury decide if the company is to blame for the larger fires in the 2017 vineyards. The lawyers also said that PG & E had failed to cut electricity in the area despite the high risk of fire.
According to California law, victims of the Tubbs case will have a trial within five months, said Mike Danko, fire victims' lawyer, in an email.
PG & E's 6.05% bonds maturing in March 2034 lost 3 cents against the dollar at 108.25 Monday, the biggest drop since January, according to Bloomberg data.
(Updates with comments from Citi analyst at the seventh paragraph.)
– With the help of Caleb Mutua.
To contact the reporters on this story: Joe Ryan in New York at [email protected], Mark Chediak in San Francisco at [email protected]
To contact the editors in charge of this story: Lynn Doan at [email protected], Joe Carroll, Joe Ryan
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