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Hawaiian Electric raised a going concern risk in its quarterly earnings report on Friday after it disclosed that it doesn’t currently have a financing plan in place yet for the $1.99 billion Maui wildfire settlement it reached earlier this month.
The utility company and its parent, Hawaiian Electric Industries, said they’re working closely with financial advisers to develop a financing plan for their share of a broader $4 billion settlement reached with victims of the deadly Maui wildfires that killed more than 100 people a year ago on Aug. 8.
“HEI and Hawaiian Electric do not yet have a financing plan in place to address the future payment of the $1.71 billion Maui windstorm and wildfire settlement accrued in the second quarter of 2024,” the company wrote in a release.
“Until a definitive financing plan is developed and is probable of being implemented, HEI and Hawaiian Electric will disclose a ‘going concern’ risk in their financial statements. This risk is the result of estimated payments under the settlement agreement,” the utility explained.
MAUI SEES SIGNIFICANT DECREASE IN TOURISTS A YEAR AFTER DEVASTATING WILDFIRES
The 2023 Maui wildfires devastated the historic town of Lahaina, killing 102 people. (Mario Tama / Getty Images)
The company said it intends to develop a financing plan that funds settlement payments through a mix of debt, common equity, equity-linked securities or other potential options.
However, it notes “there can be no assurance at this time as to the availability or terms of any such financing.”
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HE | HAWAIIAN ELECTRIC INDUSTRIES INC. | 15.53 | -0.45 | -2.82% |
HEI suspended its dividend in connection with its going concern statement and the company believes there is “sufficient liquidity runway as parties work toward finalizing the agreement in principle to settle tort claims related to the Maui wildfires.”
DEADLY MAUI WILDFIRES INFLICT MULTIBILLION-DOLLAR BLOW TO HAWAII’S ECONOMY
People gather at a public hillside memorial to Lahaina wildfire victims on Aug. 7, 2024, in Lahaina, Hawaii. (Mario Tama / Getty Images)
Hawaiian Electric’s total contribution to the settlement amounts to $1.99 billion pre-tax and includes the $75 million the company previously contributed to the One Ohana Initiative. The settlement is to be paid in four installments.
Scott Seu, president and CEO of HEI, said in the company’s latest earnings release that the settlement “would allow all parties to come together on a path forward.”
Seu added that he and the board “are confident that this settlement represents the best outcome for HEI, as it provides a clear line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company’s path ahead.”
An aerial view of a Lahaina, Maui, neighborhood that was devastated by the August 2023 wildfires. (Justin Sullivan / Getty Images)
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Settlement payments are expected to begin in mid-2025 following judicial review and approval, the utility company said previously. Hawaiian Electric and other defendants in the settlement didn’t admit to any legal liability under the terms of the agreement.
Hawaiian Electric did not immediately respond to a request for comment made outside of usual business hours.
Reuters contributed to this report.
