The California utility’s bankruptcy filing sets up a complicated legal case that could raise electricity rates and hurt power suppliers while generating hundreds of millions in lawyers’ fees.Pacific Gas and Electric’s bankruptcy filing sets up a complicated legal case. Some investors who own the company’s stock have argued that the utility does not need bankruptcy…
SACRAMENTO (Reuters) – PG&E Corp, owner of the largest U.S. power utility, filed for bankruptcy protection on Tuesday in anticipation of liabilities in excess of $30 billion from the deadliest wildfires in California’s history.
PG&E, which provides electricity and natural gas to 16 million customers in northern and central California and employs 24,000 people, vowed to keep the lights on and continue with critical investments it said were needed in its system’s safety and maintenance.
“The power and gas will stay on … We are not ‘going out of business,’ and there will be no disruption in the services you expect from us,” interim Chief Executive John Simon said in a letter to customers.
PG&E faced no immediate cash crunch. Its decision to file for bankruptcy was driven by its assessment of upcoming legal liabilities. While state investigators cleared PG&E this month of liability in one of several 2017 wildfires in California’s wine country, the company still may be found liable for a fire that killed at least 86 people in Northern California in November.
The San Francisco-based company faces lawsuits from owners of homes and businesses that burned during that and other fires. Filing for bankruptcy temporarily shields PG&E from these claims, allowing it to negotiate settlements in bankruptcy court.
PG&E’s bankruptcy attracted criticism from some California politicians, shareholders and wildfire victim advocates. California Senate President Toni Atkins called PG&E’s decision disappointing and said the bankruptcy was not the optimum solution for Californians.
“That was PG&E’s choice but it does not change my focus, which remains protecting the best interests of the people of California,” Gavin Newsom, who took office as governor of California earlier this month, said in a statement.
California Attorney General Xavier Becerra, a Democrat, said he expected to represent the state and its people in the bankruptcy court as the proceeding continued.
“We’re prepared to do whatever is necessary to protect ratepayers, taxpayers and wildfire victims,” Becerra said in an interview in Sacramento.
Calling the bankruptcy “a whole new world” because it put the massive utility under the control of a federal court, Becerra said several state agencies would be affected by the move, along with California’s 40 million people and victims of wildfire that the company’s equipment may have ignited.
BlueMountain Capital Management LLC, an investment firm that owns about 2 percent of PG&E, called the company’s move “reckless” and detrimental to shareholders. It has vowed to launch a proxy contest next month to replace PG&E’s board directors.
PG&E’s shares jumped more than 16 percent on Tuesday as investors speculated over how much equity holders will be able to recover.
PG&E listed assets of $71.39 billion and liabilities of $51.69 billion as of Sept. 30 in the voluntary Chapter 11 document filed in the U.S. Bankruptcy Court for the Northern District of California, indicating that its equity would likely retain at least some of its value.
PG&E shares closed at $13.99 on Tuesday, giving the company a market value of $7.26 billion. Still, the stock remains down close to 80 percent since October, before the latest round of wildfires broke out. PG&E had said earlier this month it was preparing for bankruptcy.
PG&E is seeking court approval for $5.5 billion in debtor-in-possession financing from J.P. Morgan, Bank of America, Barclays, Citi, and other banks, it said. The sum is roughly equal to PG&E’s annual spending.
PG&E also carries a debt load of more than $18 billion. Company advisers expect that it may take two years or more to emerge from bankruptcy.
IMPACT OF CLIMATE CHANGE
An arcane California legal rule, known as “inverse condemnation,” exposes California utilities to liabilities from wildfires regardless of their negligence as long as their equipment is involved.
This has raised concerns among some PG&E investors that exiting bankruptcy could take longer if there were more wildfires, a real threat given that climate change has turned the blazes into an annual occurrence.
Investors in other utilities are fretting as well. Shares of Rosemead, California-based Edison International, for example, are down 20 percent since the November wildfires.
Another issue at stake is PG&E’s contracts for renewable power. These are critical for California, which last year delivered 33 percent of its energy from renewable sources and has a goal to source 60 percent of its power from renewables by 2030. PG&E has more than 250 contracts for renewable power that represent $57 billion in investment, it said last month.
Federal energy regulators said on Friday they had joint jurisdiction with a bankruptcy court over requests to cancel or renegotiate power contracts by PG&E.
PG&E as part of its bankruptcy filing on Tuesday challenged that claim to jurisdiction, saying in court papers that rejecting and assuming power purchase agreements will be vital to its reorganization.
The company’s papers asked for an order keeping the agreements under the bankruptcy court’s exclusive jurisdiction and declaring that any decision to reject the agreements would not need the approval of federal energy regulators.
“We ultimately continue to view power-purchase agreements as being fully honored by PG&E in our base-case scenario where key California Public Utilities Commission, legislative and other stakeholders with strong ties to the state’s environmental goals intervene in the bankruptcy process,” JPMorgan analysts wrote in a research note this week.
Last year, lawmakers gave PG&E permission to raise rates to cover wildfire losses from 2017. But elected officials have shown little appetite for new rate hikes or other maneuvers to prevent a bankruptcy filing.
(Reporting by Sharon Bernstein in Sacramento, Calif.; Additional reporting by Subrat Patnaik in Bengaluru and Jim Christie in San Francisco; Editing by Nick Zieminski and Matthew Lewis)
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As a structured settlement expert you would expect one to stay up to date on the structured settlement industry. One of the major Buyers of structured Settlements made the news again. Nothing bad per-say this time just some facts that show being a buyer of structured settlements is a profitable business as shown in this article below.
According to Zacks, “The J.G. Wentworth Company is focused on key sectors, including structured settlement payment purchasing, annuity payment purchasing, and lottery payment purchasing and pre-settlement funding. The Company operates two brands, JG Wentworth and Peachtree. It act as an intermediary that identifies, underwrites and purchases individual payment streams from its customers, aggregates those payment streams and then finances them in the institutional market at discount rates below its cost to purchase. The J.G. Wentworth Company, formerly known as JGWPT Holdings Inc., is headquartered in suburban Philadelphia. “
Zacks has also taken action a number of other stocks recently. The firm downgraded shares of Vermillion, Inc. from a buy rating to a hold rating. Also, Zacks upgraded shares of Uranium Resources, Inc. from a sell rating to a hold rating. Finally, Zacks downgraded shares of UniPixel Inc from a hold rating to a sell rating.
Shares of JG Wentworth (NYSE:JGW) traded up 0.67% on Tuesday, hitting $8.97. The stock had a trading volume of 17,709 shares. JG Wentworth has a one year low of $8.65 and a one year high of $13.93. The stock’s 50-day moving average is $9.60 and its 200-day moving average is $9.99. The company has a market cap of $126.13 million and a P/E ratio of 5.87.
JG Wentworth (NYSE:JGW) last released its earnings data on Monday, May 11th. The company reported $0.29 EPS for the quarter, missing the Thomson Reuters consensus estimate of $0.35 by $0.06. The company had revenue of $86.80 million for the quarter, compared to the consensus estimate of $63.43 million. Analysts expect that JG Wentworth will post $1.43 EPS for the current fiscal year.
Separately, analysts at Deutsche Bank downgraded shares of JG Wentworth from a buy rating to a hold rating and lowered their price target for the stock from $13.00 to $11.00 in a research note on Friday, May 22nd. One investment analyst has rated the stock with a sell rating, three have given a hold rating and two have assigned a buy rating to the company’s stock. JG Wentworth currently has an average rating of Hold and a consensus price target of $11.68.
In other JG Wentworth news, major shareholder Special Situations M. Trishield purchased 73,000 shares of the stock in a transaction that occurred on Monday, June 1st. The stock was purchased at an average cost of $9.07 per share, with a total value of $662,110.00. The purchase was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this link. Also, major shareholder Special Situations M. Trishield bought 41,225 shares of JG Wentworth stock in a transaction that occurred on Friday, May 22nd. The stock was purchased at an average cost of $9.47 per share, with a total value of $390,400.75. The disclosure for this purchase can be found here.
J.G. Wentworth Company, formerly JGWPT Holdings Inc., is a direct response marketer that provides liquidity to its customers by purchasing structured settlement, annuity and lottery payment streams, as well as interests in the proceeds of legal claims, in the United States. The Company act as an intermediary that identifies, underwrites and purchases individual payment streams from its customers, aggregates those payment streams and then finances them in the institutional market at discount rates below its cost to purchase. The Company operates two brands, JG Wentworth and Peachtree. Its products include structured settlements, annuities, lotteries and pre-settlement funding.
The Law Offices of Eugene Ahtirski provide Independent Professional Advice to sellers of structured settlements and underwriting protection advice to private investors purchasing secondary market annuities.
Originally posted 2015-07-14 20:35:30. Republished by Blog Post Promoter
The post Buyers of Structured Settlements<span class="entry-meta">Originally Posted on July 14, 2015, last updated on November 9, 2015 and reposted on January 27, 2019</span> appeared first on Structured Settlement Expert.