PG&E Corp. announced in an 8-K filing with the SEC on Monday that it plans to file for bankruptcy following months of stock losses and potential liabilities from the recent California wildfires.
Participants in the company's 401(k) plan and other shareholders have been hurt by the stock losses.
The announcement by the San Francisco-based utility that it plans to enter Chapter 11 bankruptcy protection on Jan. 29 comes after months of stock losses as the result of fire damage to its lines and infrastructure, as well as allegations that its equipment caused the Camp Fire that began Nov. 8.
The PG&E 401(k) plan had 11% of its $6.689 billion in assets invested in company stock as Sept. 30, according to Pensions & Investments data. The company's stock price plummeted to $8.38 on Monday following the announcement, down 81.8% from the closing price of $46.01 on Sept. 28, which means participants have more than $600 million in value since then in their company stock holdings. The announcement also comes following Moody's Investor Service announcement last week that it had downgraded PG&E to non-investment-grade credit ratings, specifically downgrading Pacific Gas and Electric Co. to Ba3 from Baa2 and PG&E Corp. to B2 from Baa3.
The company, in the 8-K filing, said it "could extend its liquidity for an extended period of time by using its assets to secure the issuance of additional capital or by accessing such forms of alternative capital," but its boards of directors have concluded "that issuing substantial amounts of secured indebtedness or accessing such forms of alternative capital to extend PG&E's liquidity outside of a restructuring under Chapter 11 is not in the best interests of PG&E and its stakeholders, and would not address the fundamental issues and challenges PG&E faces." Those challenges include potential liabilities not only for the recent Camp Fire wildfire but the 2017 Northern California wildfires as well.