Two Hawaiian Electric Industries Inc. stockholder groups are suing the parent company of the state’s largest utility and NextEra Energy Inc. to stop the Florida-based clean-energy company’s plans to buy HEI for $4.3 billion.
Local attorney David F. Simons and local partnership Bickerton Dang filed class-action lawsuits in state Circuit Court on Monday against the two companies on behalf of shareholder groups.
The two lawsuits name as defendants Hawaiian Electric Industries, NextEra Energy and NextEra Energy-affiliated companies as well as HEI board members Constance Lau, Thomas Fargo, Peggy Fowler, Maurice Myers, Keith Russell, James Scott, Kelvin Taketa, Barry Taniguchi and Jeffrey Watanabe. Lau is president and chief executive officer of HEI. Watanabe is chairman.
According to the lawsuit filed by Bickerton Dang, NextEra’s planned buyout of HEI undervalues the company by failing "to maximize shareholder value and to protect interests of HEI shareholders."
The proposed acquisition does not guarantee benefits for shareholders and ratepayers, according to the lawsuit filed by Simons.
"Through the proposed acquisition it appears NextEra is trying to corner the market for solar power and storage in Hawaii," Simons said.
About 11 percent of HEI customers on Oahu have rooftop solar systems compared with only 0.07 percent at NextEra Energy’s Florida utility.
The lawsuits also claim that the purchase agreement discourages HEI from getting higher bids by requiring HEI to report competing proposals to NextEra and pay a "termination fee" of $90 million if HEI accepts a higher bid for the company.
HEI board members favored "NextEra’s or (their) own financial interests over those of HEI and its public, non-insider shareholders," according to the claim filed by Bickerton Dang.
If stockholders approve NextEra’s proposal to purchase HEI, holders of Hawaiian Electric stock would receive 0.2413 shares in NextEra, plus a 50-cent, one-time dividend, for each share they own. American Savings Bank, which is owned by HEI, would be spun off as part of the deal.
Including an $8 per share estimated value for the American Savings spinoff, the deal values Hawaiian Electric at about $33.50 per share, the companies said. Without the spinoff, the sale values HEI at $25.69 a share, or $2.6 billion. The deal includes the assumption of $1.7 billion in HEI debt.
HEI’s stock closed down 9 cents Monday at $32.89 on the New York Stock Exchange.
Board members and directors of HEI will receive $27 million in value from the sale, according to the claim filed by Simons.
CEO Lau would earn $15 million after the agreement is approved.
Several investigations have been launched regarding the fairness of the sale to investors following the announcement of the proposed acquisition.
Hawaii’s leading utility, which includes Hawaiian Electric Co., Maui Electric Co. and Hawaii Electric Light Co. on Hawaii island, has 450,000 customers. Hawaiian Electric was founded in 1891 by King David Kalakaua.
NextEra Energy has approximately $15.5 billion in consolidated revenue and more than 42,500 megawatts across its two subsidiaries, NextEra Energy Resources LLC and Florida Power & Light.
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CORRECTION: An earlier version of this story reported that approximately 3 percent of NextEra’s Energy’s Florida Power & Light customers have rooftop solar.
