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PG & E
Corp.
PCG -24.26%
Shares fell after a judge allowed a lawsuit over whether his equipment was causing the second largest fire in California's history, a case that could add Billions of dollars in the liabilities of the bankrupt company.
Fire investigators in California concluded in January that PG & E equipment was not causing the Tubbs fire, the deadliest among a series of fires that ravaged the California wine region in 2017. But the lawyers representing the victims of the fires strongly dispute this conclusion and have persuaded the judge who supervised the procedure engaged by PG & E under chapter 11. on Friday to allow a civil lawsuit of state on the question.
PG & E shares hit a seven-month low on Monday, falling 28% in the middle of the morning, as investors face the prospect of the company paying billions of dollars in additional liability costs more restructuring before a bankruptcy court.
Citi analyst
Praful Mehta
On Monday, he reduced his purchase rating on PG & E, estimating that the fire could add $ 15 billion to the costs of PG & E's liability. He stated that there was "A significant risk" that a jury decides that PG & E should be held responsible for the fire, as the company continues to have problems to run its power grid safely.
"We believe that a jury trial introduces many other dynamics, especially given PG & E's history of poor security and operational culture," he said.
PG & E filed a Chapter 11 Protection Claim in January, citing potential over $ 30 billion in obligations related to a series of fires in 2017 and 2018, which collectively killed more than 100 people. people. This calculation included the Tubbs fire, which killed 22 people and burned nearly 37,000 acres mainly in Napa and Sonoma counties.
While the company was preparing its bankruptcy filing, California fire investigators determined that a private electrical system had lit the Tubbs fire and stated that they had found no evidence that PG & E had violated the law in force.
Lawyers representing fire victims and insurance companies say they have evidence that could prove that PG & E equipment was involved in the fire.
Mike Danko,
a litigator representing the fire victims of 2017 and 2018, said the state inquiry into the Tubbs fire had not taken into account the video evidence and the 39; other information indicating that the fire may have been triggered by PG & E equipment. He said he expected to go to trial within five months and is considering joining in with the police. other lawyers to prepare additional evidence.
Vulnerabilities in PG & E's infrastructure, coupled with the impact of climate change, have caused hundreds of fires in California, including the terrible campfire of 2018. Here is a snapshot of the improvements to the power grid. utility giant who could have prevented these fires. Photo: Reuters
"We will explain everything," he said. "All cards related to Tubbs must be returned to the table."
In a statement Friday, PG & E said it was sticking to investigators' findings.
"Whatever the next legal steps, Cal Fire has already determined that the cause of the Tubbs fire in 2017 was not related to PG & E equipment," the company said.
Dov Gertzulin,
Founder of DG Capital Management, PG & E bondholder, "This is a disappointment for investors. Two Cal Fire teams determined that PG & E had no responsibility for the Tubbs fire … This adds further uncertainty to the process. It is possible that the jury awards a high number of claims in tort ".
The 6.05% PG & E senior notes maturing in 2034 lost more than 2 cents to 109 cents per dollar from Friday, according to MarketAxess.
-Soma Biswas contributed to this article.
Write to Katherine Blunt at [email protected]
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