Pipeline blast sends PG&E shares plummeting
Shares of PG&E Corp., the parent of Pacific Gas & Electric, plunged more than 8% on Friday in heavy trading as investors fled in the wake of the gas-line break and fatal fire Thursday in San Bruno.
The stock sank $4.03, or 8.3%, to close at $44.21, wiping out $1.6 billion of the company’s market capitalization.
The fire killed at least four people and destroyed 38 homes.
The company said in a filing with the Securities and Exchange Commission that although “the exact cause of the explosion has not been determined, a 30-inch steel gas transmission pipeline owned and operated by the utility in this area was ruptured.”
PG&E said it had “liability insurance for damages caused by fire in the approximate amount of $992 million in excess of a $10 million deductible. Depending on the final outcome of the investigation, and if insurance recoveries are unavailable or insufficient to cover the losses, PG&E Corp.’s and the utility’s financial condition or results of operations could be materially adversely affected.”
That was enough of a warning to drive some investors out of the stock, which had rallied sharply since early July and was approaching its record high of $52.11 reached in April 2007.PG&E puts its investors through the wringer less than a decade ago: They suffered massive losses in late-2000 and early-2001 as the company reeled from California’s energy crisis of the late-1990s.
Unable to pass on soaring wholesale power costs to customers, the company’s utility unit filed for bankruptcy in April 2001.
PG&E shares plummeted from about $29 in late-November 2000 to less than $7 on April 9, 2001, two days after the bankruptcy filing. The stock recouped all of its pre-bankruptcy losses by early-2004, but investors went through 2001, 2002 and 2003 without receiving dividend payments.
The current annual dividend rate on the stock is $1.82 a share. That gives the shares a yield of 4.1% at Friday’s closing price.
-- Tom Petruno