Author Topic: PG&E - Potential Bankruptcy  (Read 13982 times)

cherzeca

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Re: PG&E - Potential Bankruptcy
« Reply #10 on: January 14, 2019, 12:34:03 PM »
the lights have to go on in California (unfortunately).  I think there is plenty of opportunity among the debt pieces, but this one requires some local knowledge, politics etc, and not just finance/bktcy, imo


BG2008

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Re: PG&E - Potential Bankruptcy
« Reply #11 on: January 14, 2019, 02:14:46 PM »
Do you know what the following means?

KYJ
Fraudulent Conveyance
DIP
Cram Down
Stalking Horse Bid
Pre-petition vs Post Petition
Absolute Priority
GUC
EC
First Day Pleading
Sign In Sheet
PACER
Docket
Disclosure Statement
Bankruptcy Plan
Claim Transfers
Chapter 11 vs Chapter 7
Equitable


If you don't know most of these terms, maybe you want to stay on the sideline.   





aws

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Re: PG&E - Potential Bankruptcy
« Reply #12 on: January 14, 2019, 11:23:57 PM »
If California lets them go bankrupt, who would dare step in with new capital post BK?  In good years they get a decent but not amazing return on equity, are crimped on their ability to upgrade infrastructure and safety by not getting enough rate increases, and then eventually there is a disaster and you're wiped out whether at fault or not.  Not an attractive value proposition for anyone.

The stock is trading like an option on California doing something to bail them out, but even if they don't get something like the massive rate increases or debt securitization I would have to think they would be fighting responsibility for wildfire claims in the courts for years.  Not sure how likely it is, but given no option but to fight back against accepting full financial responsibility for the disaster, they might be able to mount a challenge to the laws governing liability vs. act of God.  They are only insolvent if massive claims like $30B+ are allowed.

DRValue

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Re: PG&E - Potential Bankruptcy
« Reply #13 on: January 15, 2019, 02:21:29 AM »
I'm only really interested if they file. Right now my opinion on what will play out is that the company is using this as leverage to lower the claims against them. For me the financials in the end matter most as I'm going to assume, regardless of rhetoric, that this business will continue in one form or another.
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Spekulatius

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Re: PG&E - Potential Bankruptcy
« Reply #14 on: January 15, 2019, 04:16:51 AM »
If California lets them go bankrupt, who would dare step in with new capital post BK?  In good years they get a decent but not amazing return on equity, are crimped on their ability to upgrade infrastructure and safety by not getting enough rate increases, and then eventually there is a disaster and you're wiped out whether at fault or not.  Not an attractive value proposition for anyone.

The stock is trading like an option on California doing something to bail them out, but even if they don't get something like the massive rate increases or debt securitization I would have to think they would be fighting responsibility for wildfire claims in the courts for years.  Not sure how likely it is, but given no option but to fight back against accepting full financial responsibility for the disaster, they might be able to mount a challenge to the laws governing liability vs. act of God.  They are only insolvent if massive claims like $30B+ are allowed.

Forget about California bailing them out. People have died and politicians needs heads on sticks and it’s better not be their own. PG&E‘s Equipment provided the spark that started these fires, so I think it’s easy to put the blame on them. If the $30B in claims go through, the equity and possibly the preferred are a zero, but the debt may still be good. Debt still trades at 80c on the $ and preferreds at 50%, which doesn’t look like a great risk reward to me. I believe CA legislators would need to indemnify their utilities better against similar claims in the future to ensure investibility, but that wouldn‘t help current investors.
« Last Edit: January 16, 2019, 04:18:01 AM by Spekulatius »
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DRValue

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Re: PG&E - Potential Bankruptcy
« Reply #15 on: January 15, 2019, 05:03:49 AM »
Agree. Debt needs to fall an awful lot more till I'm interested.
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DRValue

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Re: PG&E - Potential Bankruptcy
« Reply #16 on: January 15, 2019, 05:05:48 AM »
Agree. Debt needs to fall an awful lot more till I'm interested.

Meaning price.
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SharperDingaan

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Re: PG&E - Potential Bankruptcy
« Reply #17 on: January 15, 2019, 07:11:15 AM »
Or ...  the assets are just bought out of bankruptcy, by somebody else (& another entity), at cents on the dollar.
All existing capital of PG&E used to cover existing (& future) claims; and the good people of California continue to receive their electricity, & pay their bills, without interuption.

Still feel like fishing in the toilet?

SD

Foreign Tuffett

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Re: PG&E - Potential Bankruptcy
« Reply #18 on: January 15, 2019, 08:09:41 AM »
Do you know what the following means?

KYJ
Fraudulent Conveyance
DIP
Cram Down
Stalking Horse Bid
Pre-petition vs Post Petition
Absolute Priority
GUC
EC
First Day Pleading
Sign In Sheet
PACER
Docket
Disclosure Statement
Bankruptcy Plan
Claim Transfers
Chapter 11 vs Chapter 7
Equitable


If you don't know most of these terms, maybe you want to stay on the sideline.

This is good advice.

DRValue

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Re: PG&E - Potential Bankruptcy
« Reply #19 on: January 15, 2019, 10:03:33 AM »
Or ...  the assets are just bought out of bankruptcy, by somebody else (& another entity), at cents on the dollar.
All existing capital of PG&E used to cover existing (& future) claims; and the good people of California continue to receive their electricity, & pay their bills, without interuption.

Still feel like fishing in the toilet?

SD

That's one possibility. Or the existing lenders lend 5b more making the unsecured rank above claims. You can only judge that on more info.
Not Investment Advice. Do Your Own Research.