California Camp Fire cause major PG&E Corp. outages
According to reports, PG&E Corp. shares fell another 22% today due to growing concerns that the utility’s insurance may not cover the possible losses from the devastating wildfire in Northern California.
The parent of Pacific Gas and Electric (PCG, -30.77% ) has seen its stock lose 52% this week. The company’s bonds also have dropped significantly this week, although they reportedly made some recovery today.
In heavy trading, PG&E Corp. 6.05% notes due 2034 traded Wednesday afternoon at 91 cents, down from around $1.05 Friday, according to MarketAxess.
California regulators are still investigating the cause of the “Camp Fire” that has blazed across roughly 140,000 acres in Butte County, Northern California.
The fire is reportedly 40% contained, according to the California Department of Forestry and Fire Protection, on Thursday. The death toll is now reportedly at 56, with about 100 people missing. It has destroyed nearly 9,000 structures, mostly homes, and remained active overnight. The fire is not expected to be fully contained until Nov. 30, according to reports.
According to Mizuho analysts, price target on PG&E shares was lowered to $27 from $48, representing 35% upside over current share prices.
They reportedly kept their rating on the stock at neutral, saying they estimated a potential after-tax liability exposure from the Camp Fire of up to $13 billion, which could be offset by $1.4 billion in insurance coverage according to SEC company filings on Tuesday.
In the filing on Tuesday, PG&E Corp. said the outage happened in the area of Butte County near the city of Paradise where the fire is reportedly started. Paradise was almost completely destroyed in the blaze.
According to PG&E, even though it had renewed its liability insurance coverage for wildfire events in its most recent quarter to close to $1.4 billion, it could be facing a far larger bill that would have disastrous consequences in the future.
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