California Governor Gavin Newsom (D) wants Warren Buffett’s Berkshire Hathaway to make a takeover bid for bankrupt utility giant PG&E Corp., Bloomberg News reported. If Berkshire is interested in buying the San Francisco-based power and natural gas company, now is the time to make an offer, Newsom said Saturday. “We would love to see that interest materialize, and in a more proactive, public effort,” he said in an interview. “That would be encouraging to see. They are one of the few that are in a position to make a significant run at this.” Newsom made the remarks following a media briefing in Napa County, just east of a wildfire that has burned more than 25,000 acres, destroyed at least 49 structures and triggered a historic evacuation of tens of thousands of people. PG&E disclosed earlier this week that one of its transmission lines went down minutes before the blaze broke out. The company’s equipment has already been tied to a series of deadly blazes that devastated California in 2017 and 2018, saddling it with an estimated $30 billion in liabilities and forcing it into bankruptcy. Berkshire has been raised as a possible suitor since PG&E’s collapse, but the most vocal group seeking to take control of the utility is a collection of creditors led by Pacific Investment Management Co. and activist investor Elliott Management Corp. Newsom said Saturday that he’d like to see more than just hedge funds vying for the company and has been talking to mayors of cities including San Francisco, San Jose and Oakland about possible bids. Read more.
In related news, PG&E Corp. shares plunged 26 percent on Friday as possible liabilities from the Kincade Fire in northern California boost the risks that shareholders will be wiped out and could undermine efforts to bring the company out of bankruptcy, Bloomberg News reported. It’s still unknown if this week’s fire in Kincade was caused by PG&E equipment. But the prospect raises the risk of draining PG&E’s equity value. This would undermine the recovery plan favored by PG&E and its shareholders, and make it more likely that a rival plan from bondholders will win approval, Citi analyst Praful Mehta said. Backers of the PG&E plan could terminate their financial commitment of over $14 billion if a destructive wildfire is linked to PG&E and its service territory before 2020. With wildfires continuing to spread, participants wonder whether PG&E will be able to reach a bankruptcy settlement. Read more.
