Not selling shares. Having smaller dividends. That doesn't assume anyone is willing to loan them money.
> If their profits fall below the level that could be achieved by selling off those assets and then investing the money at the market rate of return, it becomes profitable for raiders to come in and buy the company and do that with it, so the company has to stay more profitable than that in order to prevent that from happening.
Ugh. I'm not sure via what mechanism, exactly, but it should not be possible for a monopoly power company to just dissolve and sell off the trucks for a tiny quick profit.
They already sold the shares and used the money to buy trucks and stuff. The dividends are effectively the interest on that money.
Suppose (made up numbers) that they have ten billion dollars in assets, but a twelve billion dollar market cap because of the expectation that those assets will be used to make future profits. Now you say "just make smaller profits" which means their market cap falls to eight billion dollars because of the expectation of smaller dividends.
Someone on Wall St then notices that they can make two billion dollars by buying them for eight billion and selling their assets for ten.
> I'm not sure via what mechanism, exactly, but it should not be possible for a monopoly power company to just dissolve and sell off the trucks for a tiny quick profit.
The government always has the option to be the buyer itself, or find one that wants to continue operating as a power company. But then it either has to raise its own capital or bring about a regulatory environment that allows a private company to meet the market rate of return and thereby raise a sufficient amount of private capital.
Whether that's just by writing it down, or having 30 billion in penalties if they stop delivering power, or by making dividends vest over 20 years...
Companies have the option of shutting down operations and selling off their assets. PG&E presumably has a fleet of trucks and equipment, land rights etc., which were paid for with investors' money. If their profits fall below the level that could be achieved by selling off those assets and then investing the money at the market rate of return, it becomes profitable for raiders to come in and buy the company and do that with it, so the company has to stay more profitable than that in order to prevent that from happening.