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The Latest From PG&E: Executive Overhaul, Judge Halts Dividend Payments

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The Latest From PG&E: Executive Overhaul, Judge Halts Dividend Payments

Utility company PG&E Corporation (NYSE: PCG) is close to reaching a deal with large investors to overhaul its board of directors and replace its CEO, Bloomberg reported.

What Happened

PG&E faces $30 billion in liabilities stemming from wildfires its equipment may have caused and the California-based company filed for bankruptcy in January. The company is now finalizing a deal with three hedge funds who collectively own 10 percent to nominate 10 new members to the board and appoint Bill Johnson, the outgoing CEO of Tennessee Valley Authority, as CEO.

Separately, a U.S. judge ruled Tuesday the company must scrap its dividend payments to shareholders, Reuters reported. Instead, the company needs to allocate the funds towards cutting down trees and other measures to lower the risk of future wildfires.

Why It's Important

The U.S. District Judge William Alsup was quoted as saying PG&E "pumped out" $4.5 billion in dividends to shareholders, NPR reported. At the same time it neglected taking down trees that should have been to reduce the risk of fire.

What's Next

The judge will continue evaluating a proposal for PG&E to shut down power lines during heavy windy periods. This would prevent tree branches from brushing with power lines that could cause sparking fires but the company says this is not feasible as the lines reach rural areas that serve cities and suburbs.

PG&E's stock closed Tuesday at $17.66 per share. Shares were trading higher by 3.9 percent at $18.35 early Wednesday morning.

Related Links:

Wells Fargo Still Cautious On California Utilities

Citi Upgrades PG&E, Raises Price Target By 200%

Photo credit: Frank Deanrdo, Flickr

Posted-In: Bill Johnson Fire npr ReutersNews Dividends Legal Media Best of Benzinga

 

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