Here we go again.
Hawaiian Electric Industries Inc. is hoping to get shareholder approval Wednesday for its sale to Florida-based NextEra Energy Inc. after it failed to win the necessary votes at a May 12 meeting.
The state’s largest electrical utility extended the vote deadline four weeks after approximately 70 percent of HEI shares were voted in favor of the sale at the last meeting. Hawaii law requires HEI to get approval from 75 percent of outstanding shares.
After coming up short May 12, the two companies have been lobbying shareholders to get the final 5 percent. The campaign has included television and print advertising as well as mailings and phone calls to HEI shareholders.
Maui Mayor Alan Arakawa, an HEI shareholder, said he has received phone calls and letters from the company lobbying for the sale even though he already voted "no."
"We get the notifications they are sending out and the phone calls," Arakawa said. "We placed a vote for ‘no.’ We didn’t want them to rush ahead (with the sale)."
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75%
The fraction of shares required to approve the merger
$46M
What NextEra estimates it will spend on costs related to the HEI sale
$4.9M
What HEI said it spent as of Dec. 31 related to the sale
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HEI sent letters encouraging shareholders to vote yes via USPS Priority Mail at a rate of $5.75, said R. "Ronnie" Goo, an HEI shareholder from Mililani. "Even though I voted and returned the first mailed ballot the day after receiving it, HEI mailed me another proxy ballot," Goo said in a letter to the Honolulu Star-Advertiser.
As of May 12 about 8 percent of HEI shares were voted against the sale, and 22 percent, or 23.7 million shares, had not been voted. A share not voted counts as a no vote.
HEI declined Tuesday to say how much the company has spent on the campaign to win shareholder approval. HEI spent $4.9 million on sale-related activities as of Dec. 31, the most recent report available. NextEra said it estimates it will spend $46 million on costs related to the sale from start to finish.
Both companies say the merger costs are not being recovered by billing ratepayers.
The two companies announced in December that NextEra was looking to buy HEI for $4.3 billion. The deal must be approved by HEI shareholders and the Hawaii Public Utilities Commission.
HEI and NextEra said ratepayers will benefit from the sale because of NextEra’s experience as the largest renewable-energy producer in the nation, its relatively low borrowing costs and experience running Florida’s largest utility. NextEra said it will save Hawaii ratepayers $60 million over four years by lowering rates and will triple solar power production.
The sale of HEI to NextEra has raised concerns about control of a major player in the state’s economy moving to the mainland and the cost of the deal being placed on the shoulders of HECO customers. The lack of rooftop solar use among NextEra’s Florida customers also has raised concern amid Hawaii’s solar proponents.
HEI is the parent company for the state’s three largest electric utilities: Hawaiian Electric Co. on Oahu, Maui Electric Co. and Hawaii Electric Light Co. on Hawaii island.
If either side backs out of the sale, it has to pay the other party a termination fee of $90 million. The termination fee doesn’t apply if the deal falls apart due to lack of shareholder approval or if state regulators reject the sale.
If HEI doesn’t get the votes required to move forward with the sale Wednesday, it can extend the deadline again.
