PG&E Shares Gain As Bankruptcy Judge Orders Mediation: Report
Shares of PG&E Corp. (PCG) rose Tuesday after a federal bankruptcy judge ordered rival groups seeking to control the troubled utility to enter mediation.
The stock gained $1.22 cents, or 32%, to end at $5.02.
Bankruptcy Judge Dennis Montali appointed Randall Newsome, a retired judge, to work with both groups, Barron’s reported. PG&E’s restructuring plan involves a settlement with claimants worth $11 billion that would preserve some equity for the company’s shareholders. A rival plan put forth by wildfire victims and bondholders would largely extinguish any remaining shareholder value.
PG&E filed for bankruptcy in January under the weight of claims related to a huge wildfire sparked by its equipment last year which killed more than 80 people and destroyed the entire town of Paradise, Calif. Victims of another fatal wildfire in 2017 that killed 22 people are also pursuing claims against the company, even though state investigators ruled that the utility was not to blame for that inferno.
PG&E shares have lost more than half their value since yet another wildfire broke out last week, north of San Francisco. No lives have been lost in the Kincade fire. However, the blaze has scorched more than 115 square miles and burned dozens of homes and other buildings.
The utility has also come under criticism for imposing so-called public safety power shutoffs in an effort to avoid sparking even more fires. Millions of Californians have been left in the dark by the shutoffs, which began Saturday and have been extended through at least Wednesday in many cases.
Ironicially, the Kincade fire, which has been linked to a failed PG&E transmission line, broke out while local distribution lines in the area had been shut off in an attempt to prevent fires. On Monday, a relatively small fire occurred in Lafayette, Calif., east of San Francisco, in a portion of PG&E’s service territory that had not been subjected to a public safety power shutoff.
California Gov. Gavin Newsom has suggested that Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) make a bid for PG&E. Buffett has not taken up the idea, however.