Hawaiian Electric raises going concern doubts on uncertainties over wildfire settlement financing
5:25 pm Friday, August 09th, 2024
By Sourasis Bose
(Reuters) -Utility firm Hawaiian Electric raised going concern doubts on Friday after disclosing that it did not have a financing plan in place for the $1.99 billion Maui wildfire settlement it reached earlier this month.
The company and its parent Hawaiian Electric Industries (HEI) said they were working closely with financial advisers to develop a financing plan for their share of the settlement and they could finance it through a mix of debt, common equity, equity-linked securities, or other potential options.
HEI had about $124 million in cash in hand after the end of the second quarter.
However, the company does not intend to raise electricity rates to pay for the settlement, HEI CEO Scott Seu said on a post-earnings conference call.
Hawaii’s largest utility had agreed to pay a large share of more than $4 billion in legal settlement to compensate victims of last year’s deadly Maui wildfires that killed over 100 people.
However, the company and other defendants did not admit to any legal liability as part of the settlement terms, which were agreed upon after four months of mediation.
The proposed payments are expected to begin from mid-2025 after judicial review and approval, the company had said earlier.
Hawaiian said on Friday that it incurred a net loss of $1.30 billion, or $11.74 per share, for the second quarter, largely due to the wildfire-related charge of $1.71 billion during the quarter.
The company is also looking at strategic options for its American Savings Bank unit and it took a goodwill impairment charge of $82.2 million in connection with the endeavor during the second quarter.
The utility will also suspend dividend payments to its parent because of the going concern assessment.
(Reporting by Sourasis Bose in Bengaluru; Editing by Anil D’Silva)
