No. of Recommendations: 26
PacifiCorp may go bankrupt without another fire...
Good summary, thanks. Not cheery, but good to know.
Let's imagine that Pacificorp goes bankrupt, with optimistically no further liabilities to BHE or its other units, and no recovery value from equity in BHE.
Back of the envelope impact for a share of Berkshire:
I looked up what fraction of BHE is accounted for by Pacificorp's six states. Not counting any recent disposals, I come up with 33% of revenue by adding up the descriptions in their corporate profile docs*. Let's assume that share of revenue is a good enough proxy for share of value.
On my figures BHE's share of total non-investment-related net income (net profits on util+rail+MS&R+ cyclically adjusted underwriting profit) has not exceeded about 15-17% in recent years, so if Pacificorp were a zero but other units not impaired, that would wipe 5-6% off the value of the operating side of Berkshire.
On my figures, operating subs have been sufficiently weak lately that their share of total share value (i.e., everything but investments per share) has fallen from maybe ~60% of total value to nearer 40% lately, though that may recover somewhat. Let's pencil in 50%?
So, overall impact to Berkshire (before second order effects) of a total loss on Pacificorp would be a loss of around 2.5 - 2.8% of the value of a share of Berkshire??
Jim
* utah 14%
oregon 7%
whyoming 5%
nor cal 3%
washington 2%
idaho 2%
