(Reuters) - PG&E Corp PCG.N, 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.

A car destroyed by the Camp Fire is seen in Paradise, California, U.S., November 13, 2018. REUTERS/Terray Sylvester

In a bid to shore up its finances, the company also said in a regulatory filing bit.ly/2zS3wVj late on Tuesday that 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 total cash on hand 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 would have seniority to PG&E’s existing bonds in any debt restructuring.

The causes of the Camp Fire, and a second in Southern California, the Woolsey Fire, are still under investigation. Pacific Gas and Electric and Edison International's EIX.N Southern California Edison have both told regulators they had experienced equipment problems in areas around the times the fires were first reported.

PG&E shares tumbled 22 percent. In all, the stock has lost almost half of its value since 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, 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.

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.

PG&E faces about $500 million of maturing floating rate notes later this month, but does not have another batch of principal repayments on its bonds until October 2020, when an $800 million bond comes due. That note, with a 3.5 percent coupon, has fallen by about 10 points since Tuesday afternoon to about 90 cents on the dollar, and its yield rocketed to nearly 9.5 percent from 3.6 percent just 24 hours earlier.

Its yield spread, a measure of additional compensation demanded by investors for holding it relative to safer bonds like U.S. Treasuries, mushroomed to 6.39 percentage points from 0.38 percentage point earlier in the week.

Longer-dated bonds got hit even harder, and all of the roughly $5 billion of PG&E debt due from 2040 and beyond is trading at steep discounts at between 70 and 80 cents on the dollar.

“We’re waiting to see,” said a PG&E bondholder, who asked to remain anonymous for compliance reasons. “Because it’s too hard to quantify the outcomes. You’ve seen some people run for the exit but there wasn’t a buyer, so you get the big trade down in price.”

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.

PG&E Corp’s PG&E utility, which provides power and gas to customers in California, has been in bankruptcy previously.

In 2001, during a California energy crisis when widespread market manipulation and a drought reduced the amount of electricity available for sale, PG&E sought bankruptcy protection because it paid an estimated $9 billion more to buy power for its customers than state regulators allowed the company to charge.

At that time, the state stepped in to buy power for PG&E and another cash-strapped power company, Southern California Edison (SCE), and eventually allowed the utilities to boost customer rates to cover some of their power purchase costs. SCE is a unit of California energy company Edison International EIX.N.