Hawaii’s biggest utility company appears to be exploring ways to navigate extraordinary financial challenges arising from the Maui wildfires last week and amid litigation over damage from the deadly catastrophe.
The Wall Street Journal reported Wednesday that Hawaiian Electric “is speaking with firms that specialize in restructuring advisory work, exploring options to address the electric utility’s financial and legal challenges arising from the Maui wildfires.”
The Journal cited unnamed people familiar with the matter as the source of the strategy discussion information, and noted that holders of Hawaiian Electric bonds that mature in 2037 were selling some of those bonds Wednesday at 69 cents on the dollar compared with 95 cents last week.
Credit rating firm S&P Global Ratings also
downgraded the utility company’s credit rating to junk Tuesday, the Journal reported.
Hawaiian Electric declined to comment on the report or on its general financial condition.
The Honolulu-based company faces huge costs to repair infrastructure on Maui due to recorded wind gusts over 60 mph and a fire that largely destroyed Lahaina on Aug. 8 and 9, burning down about 2,200 structures and leaving more than
100 people dead.
Shelee Kimura, Hawaiian Electric CEO, said at a Monday news conference on Maui that 400 of 750 utility poles serving West Maui were damaged or destroyed, that 300 of 575 transformers in the same system had
visible damage, and that all three transmission lines serving the area went out of service.
The company shipped 26 specialized vehicles and heavy equipment to Maui to help with repairs being made by about 400 of its employees from across
the state and additional contractors.
“Our employees will be there today, and for however long it takes to help Maui to recover,” Kimura said. “This is our home, and our ohana.”
About 12,400 customers in West Maui lost power initially in the disaster, and service had been restored to all but about 2,000 remaining customers as of Monday using one restored transmission line. The same number of customers still were without power Wednesday, according
to Gov. Josh Green.
A lower credit rating makes borrowing money for any needs more expensive for Hawaiian Electric, which serves all Hawaii counties except for Kauai.
The company also is
facing four lawsuits filed
in state court after the
disaster alleging that Hawaiian Electric is responsible for losses due to the fire based on contentions that its equipment sparked the blaze in Lahaina. More lawsuits are expected.
The first two complaints, which seek class-action status, were filed Saturday.
A third was filed Monday on behalf of one homeowner, three renters and one business owner in
Lahaina who all lost their property and are seeking damages not as part of any larger class.
The fourth lawsuit was filed Wednesday on behalf of the owner of two historic residences in Lahaina that burned to the ground.
No cause of the Lahaina fire has been determined.
Total property losses from the fire initially have been estimated at $5.6 billion.
The parent company of the utility, Hawaiian Electric Industries Inc., which also owns American Savings Bank, has earned roughly between $200 million and $250 million in each of the past three years on revenue of $2.6 billion to $3.7 billion.
Shares of HEI stock have plummeted 61% in value since the disaster, closing at $14.57 Wednesday compared with $37.36 on Aug. 7. The 52-week high for the stock was $43.45 on Feb. 7.
