(Bloomberg) — Only 19 months after the Camp Fire erupted in the tinderbox mountains of Northern California, PG&E Corp., the power utility behind the deadliest conflagration in the state’s history, is poised to emerge from bankruptcy with its safety reforms still in question.As the state braces for another fire season, the judge overseeing PG&E’s Chapter 11 case said Tuesday he would approve its $59 billion turnaround plan. Moments earlier, its chief executive officer pleaded guilty on behalf of the company to involuntary manslaughter, bringing its criminal case from the deadly blaze close to an end. And on Wall Street, PG&E moved forward with plans to sell bonds to fund its restructuring.The quick series of events concludes a tumultuous chapter for PG&E. Yet it’s exiting bankruptcy facing many of the same challenges as it did the day it filed. Efforts to strengthen its finances and safety procedures are still underway, and the long-term future of the giant utility remains in question.“It’s only going to take one season like the last couple and they’d be back in bankruptcy,” said San Jose Mayor Sam Liccardo, who led an unsuccessful push to turn PG&E into a customer-owned cooperative.During an online hearing, U.S. Bankruptcy Judge Dennis Montali said he will issue a notice Wednesday outlining his plan to approve PG&E’s restructuring. The judge said he will schedule a hearing for Friday to iron out a handful of issues.“I’m going to come to the conclusion that the plan should be confirmed,” Montali said.An attorney for PG&E asked for an official order confirming the plan by Monday so the company can start selling $9 billion in equity to help fund its reorganization. It’s already sold $8.9 billion in investment-grade bonds and is raising $3.75 billion in junk bonds. As of Tuesday morning, the company had received about triple the number of orders it’s seeking for the high-yield notes.Read More: PRICED: Pacific Gas And Electric $8.925b Debt OfferingOn the morning of Nov. 8, 2018, in the foothills of the Sierra Nevada mountains, a faulty PG&E transmission line ignited what soon became a hell on Earth — a fire that soon consumed more than 150,000 acres, including the entire town of Paradise. It killed more than 80 people and destroyed nearly 19,000 homes, businesses and other structures.PG&E, which serves about 16 million people in Northern and Central California, has made some crucial changes since collapsing into bankruptcy in the aftermath of the blaze. It has replaced 11 of its 14 board members and is allowing for additional state oversight, appointing an independent safety monitor and dividing operations into regional units to focus more on safety. The company will have a new chief executive officer after its current one, Bill Johnson, steps down at the end of the month.As the judge prepared to announce his decision Tuesday, Johnson appeared in a California courtroom in Chico, some 20 miles from where the Camp Fire began. On behalf of the company, he pleaded guilty to 84 counts of involuntary manslaughter and one count of unlawfully starting a fire.“PG&E will never forget the Camp Fire and all that it took from this region,” Johnson said. “We remain deeply, deeply sorry for the terrible devastation we have caused.”READ MORE: PG&E Pleads Guilty to Killing 84 People in 2018 Camp FireHours after Johnson spoke, the Butte County District Attorney, who prosecuted the utility, released a scathing 92-page report of his probe into the Camp Fire. The findings included that a broken metal hook supporting the power line that started the blaze was at least 97 years old. The tower that held the equipment was about 100 years old.In essence, the prosecutor said, “PG&E blindly bought a used car. PG&E drove that car until it fell apart.”In a statement, PG&E said it has made “substantial progress” toward emerging from bankruptcy as a financially stable company that is positioned to safely supply California with power and help meet the state’s clean-energy goal.Critics, however, contend the reforms have yet to fully address the daunting operational challenges PG&E faces. Despite calls for the company to be broken up or turned into a government-owned entity, it will remain a colossal investor-owned utility. And it will emerge from Chapter 11 having nearly doubled its debt to more than $38 billion.As recently as May, a federal judge overseeing PG&E’s criminal probation stemming from a fatal gas-pipeline explosion in 2010 excoriated the company, saying it continues to drag its feet on safety and calling it a “recalcitrant criminal.”“If ever there was a corporation that deserved to go to prison — it is PG&E,” U.S. District Judge William Alsup said during a virtual hearing. “I’m going to do everything within my power to protect the people of California from further crimes and further destruction by PG&E.”PG&E’s debt has raised concerns about its financial durability and its ability to make an estimated $40 billion in investments required to fire-proof its grid. In the meantime, the utility will need to resort to intentionally shutting off power to keep its lines from igniting fires during wind storms.The company expects to officially exit bankruptcy at some point this summer, after it closes on the financing it has lined up to fund its reorganization. If PG&E gets into trouble again, California will have the option to take the utility over as part of an agreement with the state to back its reorganization plan.“This company didn’t get much out of the bankruptcy that’s going to help it going forward,” said Jared Ellias, a bankruptcy law professor at the University of California, Hastings College of Law. “They are leaving bankruptcy basically having converted pre-bankruptcy claims into mostly debt they have to pay.”One key advantage PG&E will have once it formally exits Chapter 11 is the option to participate in a state fund established to help utilities cover liabilities from future fires linked to their equipment.In all, investigators blamed PG&E equipment for 21 fires in 2017 and 2018. PG&E’s downfall underscores the increasing vulnerability utilities face as wildfires and hurricanes become more extreme. That’s especially the case in California, where state law holds utilities liable for damages even if they aren’t found to be negligent.PG&E’s odyssey through Chapter 11 turned into a battle for control of the century-old company as some of the biggest names on Wall Street including Pacific Investment Management Co., Elliott Management Corp. and Seth Klarman’s Baupost Group fought over competing reorganization plans.Judge Montali says he will confirm PG&E’s proposal despite concerns from some fire victims about whether they will get the full value of a $13.5 billion settlement to pay claims filed on behalf of an estimated 70,000 families and businesses devastated by fires.Half of the settlement will be paid in stock that some victims worry may go down in value if PG&E is blamed for causing more wildfires this year. The trust could see a $2 billion shortfall in the value of its shares when PG&E emerges based on current stock price estimates, an attorney for fire victims said Tuesday during the bankruptcy hearing.“Everyone here in Northern California really needs this company to succeed,” Ellias said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
from Yahoo Finance https://ift.tt/2UNeBCk
The head of the Federal Aviation Administration is set to testify on Wednesday before a Senate committee on the safety certification of jetliners like Boeing Co’s 737 MAX, still grounded after fatal crashes. The Senate Commerce committee hearing at 10 a.m. EDT (1400 GMT) gives lawmakers a chance to question FAA Administrator Steve Dickson about bipartisan legislation introduced Tuesday that would grant the FAA more power over Boeing’s aircraft designs.
Yahoo Finance’s Alexis Christoforous and Brian Sozzi react to the May retail sales number with Columbia Business School Professor Mark Cohen. With the job market kicking back into gear after the worst of the COVID-19 pandemic, Target looks to attract new workers to meet demand.
We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The…
Volkswagen will pay a 48% premium to buy out the minority shareholders of premium division Audi, Audi said on Tuesday. Volkswagen, which already holds 99.64% of Audi, announced the squeeze-out plans in February. “Volkswagen AG announced and specified that it has set the cash settlement to be paid to the minority shareholders in return for the transfer of their shares at 1,551.53 euros per AUDI AG share,” the carmaker said.
The millions of Americans who have filed for unemployment benefits since the pandemic hit the economy in March face an unwelcome surprise next month.Shares in DraftKings (DKNG) sank almost 7% in pre-market trading after the U.S. sports betting company announced a public offering to sell its common stock.The stock dropped to $37.80 in early market trading. DraftKings said it has commenced an underwritten public offering of 33 million shares of its Class A common stock, consisting of 14 million shares offered by DraftKings and 19 million shares offered by some of the company’s shareholders.The stockholders intend to grant the underwriters a 30-day option to purchase up to an additional 4.95 million shares of Class A common stock. DraftKings will not receive any proceeds from the sale of Class A common stock offered by the stockholders. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed.DraftKings said it intends to use the net proceeds it receives from the offering for general corporate purposes. Goldman Sachs & Co. and Credit Suisse Securities (USA) are acting as joint book-running managers.The share sale offering comes after the sports gambling went public at the end of April. Since the Nasdaq debut, the stock has more than doubled and is trading at $40.57 as of Tuesday’s close.Five-star analyst Jed Kelly at Oppenheimer last week initiated coverage of the stock with a Buy rating and a $48 price target.“As more states legalize sports gambling, we believe competencies in product development and customer acquisition will allow the company to be a critical player in accelerating the shift in US sports betting from ~$150 billion wagered illegally/ offshore to licensed domestic operators,” Kelly wrote in a note to investors.Although legalized sports betting and iGaming markets are in their very early stages of growth, Kelly estimates for the US legal sports wagering market to grow about 43% annually, reaching about $8 billion by 2025, and $14.4 billion by 2028 as more states regulate sports gaming. The analyst expects DraftKings to achieve about 25% market share.“While a premium valuation and high cash flow burn likely create above-average volatility near term, we emphasize the long-term nature of our rating,” Kelly added.The stock scores 7 Buy ratings versus 1 Hold rating adding up to a Strong Buy analyst consensus. The $43.29 average price target implies 6.7% upside potential in the shares over the coming year. (See DraftKings stock analysis on TipRanks).Related News: iQIYI Pops 35% In Pre-Market On Report Tencent Seeks To Buy Big Stake Nio Completes $428M ADS Offering, Stock Now Up 70% YTD Google Mulling Purchase of Stake in Indian Vodafone Idea More recent articles from Smarter Analyst: * Oracle Sinks Post-Earnings As Cloud Push Drags On * Tesla Clinches Three-Year Pricing Deal With Panasonic For Battery Cells * Google Brings Meet To Mobile In Latest Video-Calling Boost * Novartis Scores FDA Ilaris Approval For Rare Type Of Arthritis