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California’s largest utility suffered its steepest stock plunge in 16 years Wednesday as concerns grew that potential liability costs from destructive wildfires threaten the company’s financial future.
Shares in PG&E Corp.(PCG) fell nearly 22% and its bonds were also hammered, capping five straight days of losses that have dragged shares down more than 47%, its worst such stretch on record.
The free fall began after the company reported to state regulators that one of its transmission lines had malfunctioned before the start of a massive fire in Northern California. The fire has now destroyed more than 7,600 single-family homes and killed at least 48 people.
The San Francisco-based company reported in a securities filing Tuesday night that it had exhausted its revolving lines of credit and warned that its $1.4 billion of insurance coverage for wildfires occurring between Aug. 1 and July 31, 2019, may be insufficient to cover all potential liability claims against the company.
Geisha Williams, PG&E’s(PCG) chief executive, said in an interview that it was premature to speculate about whether the company would need to seek bankruptcy protection. She said the company tapped its credit lines to create more financial flexibility.
“The cause of the fire has not been determined, so it’s not clear if we’re going to be held responsible,” Ms. Williams said, adding that it is currently focused on assisting communities and first responders.