(Adds detail on legal claims and market reaction)
Nov 14 (Reuters) - PG&E Corp, the electricity provider in the northern California region ravaged by a deadly wildfire, warned that it could face "significant liability" in excess of its insurance coverage if its equipment caused the blaze, sending its shares and bonds sharply lower.
In a bid to shore up its finances, the company also said in a regulatory filing https://bit.ly/2zS3wVj late Tuesday it had borrowed more than $3 billion under credit lines available to it and its Pacific Gas and Electric Co power utility, the maximum available from those sources. That brought the total cash on hand for the company to more than $3.4 billion from just $440 million at the end of September.
The developments triggered fresh pressure on PG&E's shares, and, for the first time since the Camp Fire's outbreak on Nov. 8, prices on more than $18 billion of PG&E bonds dropped substantially. The new borrowings under its credit lines would have seniority to PG&E's existing bonds in any debt restructuring.
PG&E shares tumbled 22 percent. In all, the stock has lost almost half of its value since the Camp Fire incinerated the town of Paradise, with investors concerned about the utility's potential liability stemming from it.
Its stock market value has fallen by $12 billion during that time, suggesting investors view that amount as the potential overall cost to PG&E from this and other potential fires this year, said Morningstar analyst Travis Miller.
"It looks like the market is pricing in the worst-case scenario," Miller said.
The fire is the deadliest in California history, blamed for at least 48 deaths and the destruction of thousands of homes and commercial properties.
The causes of that fire, and a second in Southern California, the Woolsey Fire, are still under investigation. Pacific Gas and Electric and Edison International's Southern California Edison have both told regulators they had experienced equipment problems in areas around the times the fires were first reported.
In contrast to the stock, PG&E's bonds had held up until the company's announcement of potential liability and that it had drawn on all its currently available credit. In its filing, PG&E said it had $1.4 billion of insurance coverage.
It added, however, "if the utility's equipment is determined to be the cause, the utility could be subject to significant liability in excess of insurance coverage that would be expected to have a material impact on PG&E Corporation's and the utility's financial condition, results of operations, liquidity, and cash flows."
The fires could set off years of litigation to determine how much of the multi-billion insurance gap PG&E would have to fill. The company already faces dozens of lawsuits from owners of homes and other properties that burned during fires in 2017, according to court documents. Insurers such as State Farm and USAA, which are on the hook for 2017 damage claims to policyholders, filed lawsuits against PG&E in San Francisco.
To keep PG&E from going bankrupt, California policymakers will face pressure to extend assistance provided in a bill approved last September allowing utilities to pass on to customers some of the costs related to wildfires, according to Moody's. The bill mitigates liability from fires in 2017 and others starting in 2019, but made no provision for fires this year.
Yields on PG&E bonds with maturities ranging from two to 29 years shot higher, in some cases by a full percentage point or more. Bond yields move in the opposite direction of prices.
The price on its $800 million bond due in October 2020 fell more than 2 points to less than 98 cents on the dollar from near par earlier in the week. Its yield climbed 1.1 percentage point to 4.65 percent.
Longer-dated bonds got hit even harder.
The company's $850 million bond due in December 2047 fell by the most ever, more than 9 points, to a record low of around 71 cents on the dollar. The bond, sporting a 3.95 percent coupon, now yields 6.04 percent.
The company also faces legal threats from fire victims.
Three law firms representing multiple victims of California's deadliest wildfire filed a lawsuit against PG&E Corp, alleging negligence and health and safety code violations by the utility.
Credit Suisse analysts estimated insured losses from the Camp, Woolsey and a smaller third fire, the Hill Fire, could range from $5 billion to $10 billion. Insurers incurred losses of around $15 billion from wildfires in the state in 2017, Credit Suisse said.
(Reporting by Dan Burns; Additional reporting by Suzanne Barlyn and Kate Duguid in New York, Noel Randewich in San Francisco and Nichola Groom in Los Angeles Editing by Nick Zieminski and Lisa Shumaker)