Hawaiian Electric, has just raised some serious concerns in its recent quarterly earnings report. The company is facing a $1.99 billion settlement related to the devastating Maui wildfires, and right now, they’re admitting they don’t have a solid plan in place to finance it. This is causing a lot of worries, mainly for the victims who still haven’t been adequately compensated.
Hawaiian Electric, along with its parent company, Hawaiian Electric Industries (HEI), recently reached a massive $4 billion settlement with victims of the Maui wildfires that tragically took more than 100 lives a year ago. Out of this, Hawaiian Electric is responsible for nearly half—$1.99 billion. But here’s the kicker: they haven’t yet figured out how to come up with the money.
In their earnings report, Hawaiian Electric and HEI revealed they’re still in the process of developing a financing plan. They’re working closely with financial advisors to figure out how they’re going to pay their share of the settlement. However, until they nail down a concrete plan, they have to acknowledge a “going concern” risk in their financial statements. In plain terms, this means there’s a significant uncertainty about their ability to keep operating without this plan in place.
The company is considering a mix of financing options, including debt, common equity, and equity-linked securities. But here’s the thing—they can’t guarantee that any of these options will be available or on favorable terms. That’s a pretty big “if,” and it’s got investors on edge.
During their earnings call, Hawaiian Electric tried to calm things down a bit. They pointed out that the settlement was only agreed upon recently, and they don’t expect to start making payments until mid-2025 at the earliest. They’re hoping this gives them enough time to come up with a solid plan.
In the meantime, HEI has suspended the utility dividend to its parent company due to this “going concern” issue. They also mentioned that there’s enough liquidity to keep things running smoothly while they work on finalizing the settlement agreement.
Even though Hawaiian Electric and the other parties involved in the settlement didn’t admit to any legal liability, they’re still on the hook for this enormous payout. Scott Seu, the president and CEO of HEI, said the settlement is a step in the right direction, offering a clear path forward for resolving wildfire-related litigation.
