What happened

Shares of beleaguered Californian utility stock PG&E Corporation (NYSE:PCG) are having a rare good day as the markets reopen for business Tuesday, up 10.7% as of 11:40 a.m. EST. But this is happening for rather a strange reason.

This morning, Reuters reported that PG&E has "secured $5.5 billion in debtor-in-possession (DIP) financing from four banks as it prepares to file for Chapter-11 bankruptcy protection." The funds, coming in the form of a $3.5 billion revolving credit line, a $1.5 billion term loan, and a $500 million delayed-draw term loan, will be used to keep the lights on and the turbines running at PG&E as it heads into what's expected to be about a two-year-long bankruptcy process, beginning on or about Jan. 29.

Downed power lines

Down more than 80% in a year, does PG&E stock look like a bargain to you? Image source: Getty Images.

So what

Here's the thing: PG&E taking on $5.5 billion in additional debt might be a good thing for its customers, who will enjoy light and heat as a result. It may be a good thing for the folks suing PG&E, trying to get money in recompense for damages caused by last year's Camp Fire wildfire and other fires for which PG&E is blamed.

However, it doesn't change the fact that PG&E shareholders will almost certainly be wiped out by the bankruptcy process and the estimated $30 billion in damages that PG&E will be trying to pay out of cash on hand, insurance proceeds, and -- this is key -- a market cap of barely $4 billion.

Now what

If and when that wipeout happens, PG&E stock that sells for $8 a share today could soon be worth $0. The small rise in value PG&E stock has seen today, on the news that the company is taking on $5.5 billion in new debt, isn't likely to last.

Check out the latest PG&E earnings call transcript.