California's Governor Wants Berkshire to Bid for Bankrupt PG&E

[Omaha Steve]

Source: Bloomberg

Mark Chediak and Michael B. Marois

(Bloomberg) -- California Governor Gavin Newsom wants Warren Buffett’s Berkshire Hathaway to make a takeover bid for bankrupt utility giant PG&E Corp.

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.



Read more: https://finance.yahoo.com/news/california-governor-wants-berkshire-bid-235301474.html

[elleng]

1. Berkshire's too smart to acquire that pig in a poke,

WITHOUT lines being buried.

[progree]

2. "If wishes were horses, then beggars would ride" - one of my mom's favorite sayings nt

[ToxMarz]

3. I think Warren Buffet would be the first to know

if he had any interest. And he wouldn't need Newsom to help or advise him

[VarryOn]

4. CA has plenty of billionaires that could buy PG&E...

Buffet is too smart to throw good money after bad.

[Grokenstein]

5. At some point, someone somewhere

...has to start turning this mess around.

You sure as hell don't want Puppet Sharpie wading in to take over in California, even if you live on the other side of the planet.

[diane in sf]

6. The state should take it over and socialize it.

[NickB79]

11. Wouldn't that leave CA taxpayers on the hook for fire liability?

And all the upgrade costs to prevent wildfires?

[Sgent]

12. California

has sovereign immunity if they choose in terms of future liability. In addition they can issues bonds at a lower cost than a private entity. Finally they are accountable to the public -- so if the choose an option like keeping the power on and endangering lives then they can do so.

[NickB79]

13. So who do the homeowners who lose their homes sue for damages?

If PG&E were bought out by CA and existing electrical equipment destroys their homes? If the state has immunity from lawsuits, and insurance companies are cutting policies in fire zones, what happens then?

[3Hotdogs]

7. Newsome's hope would be to have Berkshire buy the utility

and treat its customers as a charity. Replace worn equipment and so forth.

Problem is, Berk. isn't a charity.

[bucolic_frolic]

8. He means Private Equity

doesn't have to be Berkshire, though they have the track record, ignoring Kraft Heinz.

Lots and lots of poorly performing firms are sold to private equity firms who then reassess the business, tweaking, vivisecting, liquidating parts, enhancing performances. Then they usually hope to sell off the business or refloat a public stock offering in the new company. In bankruptcy, equity is often worthless or debt is converted to equity or deals are cut to lessen the debt burden.

I think Payless Shoes were private equity owned when then went bankrupt.

Companies have life cycles. Mature companies stop growing. Some tumble. Such failures are the life blood of private equity, they need a new supply of projects to feed their profits.

[SWBTATTReg]

9. Personally, trying to find someone else to take over this mess, is trying to shift the blame...

The blame belongs on multiple entities, the company for not being aggressive enough to stem the problem of winds against power lines, causing them to spark, etc. (and not upgrading the electrical infrastructure enough to allow this piece meal shut off of power lines when things get dicey).

Other entities are consumers, environmentalists, the public utility commission, and probably other entities I haven't listed.

The environment in CA can be (obviously) rough on power lines, but solutions are not cheap, and the PUC (public utility commission) probably wouldn't allow the massive costs of upgrading the infrastructure through, being that it would make electrical bills too high (but in view of one's house burning down vs. a higher bill?).

Perhaps the company, consumers, the PUC, etc. will all work together, to resolve this situation, since if you bankrupt the company, you pretty well lose any other alternatives to address the problem.

Sounds like a mess, I hope that it gets worked out.

[roamer65]

10. CA should repossess it.

Turn it into a state-owned utility. Make it a world model for green energy.