PGE rejects $2.5bn offer from San Francisco to buy its assets
Bankrupt energy provider resists asset-stripping
Pacific Gas and Electric (PGE) has rejected an offer from the city of San Francisco to buy its infrastructure.
It has emerged that London Breed, the city’s mayor, offered the bankrupt energy provider $2.5bn for its power lines and other facilities within the city area.
Bill Johnson, PGE’s CEO, responded to the offer in a letter stating: “Although we cannot accept your offer, we want to clearly communicate that PGE intends to continue working with the city to best serve the citizens and businesses of San Francisco.”
Johnson argued that the offer was too low and, in any case, selling off the company’s assets was not part of the financing strategy the company hopes will lift it from bankruptcy.
It is unclear, however, whether this is an absolute rejection or a negotiating gambit, with observers unsure how long the embattled firm can hold out.
PGE sought Chapter 11 bankruptcy protection in December 2018 with its stock falling more than 65 per cent so far this year. Last Thursday witnessed a 25 per cent drop as the company lost control of its ability to manage its own bankruptcy and a consortium of bondholders unveiled a financial restructuring plan. The company also introduced rolling blackouts throughout California to stave off wildfires.
The 800,000 customers left without power took to social media to condemn the company while Governor Gavin Newsom stated: “This is not a climate change story as much as a story about greed and mismanagement over the course of decades. Neglect, a desire to advance not public safety but profits.”
PGE’s stock price has remained around $7.7 following its dramatic Thursday drop and it is unclear how it will fare this week. Analysts at Morgan Stanley think it could fall to zero if the company’s restructuring plans are confirmed. Citigroup analysts have stated that there is a 75 per cent chance of a drop to zero.