Hawaiian Electric Industries Inc. has sold over 90% of its subsidiary American Savings Bank to independent investors in a transaction that will provide HEI with much-needed funds to help pay its share of the $4 billion Maui wildfire lawsuit settlement while also keeping Hawaii’s third-largest bank under local leadership.

The deal, which closed Tuesday, values the bank at $450 million, with the investors purchasing the 90.1% of ASB common stock from HEI for $405 million.

Each investor will have a noncontrolling interest in ASB, and HEI has retained a 9.9% stake.

An HEI filing with Securities and Exchange Commission lists nearly two dozen investors, including ASB’s executive team and independent directors, as well as several investment and venture capital firms.

“The sale allows HEI to enhance our focus on the utility as we work to help our state recover from the 2023 Maui wildfires and strengthen the financial and strategic position of our company,” Scott Seu, HEI’s president and CEO, said in a news release. “We intend to use the proceeds to reduce holding company debt, increasing flexibility for how HEI funds the HEI and Hawaiian Electric wildfire settlement contributions and key utility initiatives,” he said.

ASB said in a separate statement that the company will continue to operate independently under its existing name and brand, with no changes to its branches or employees.

“This represents the best outcome for ASB, our customers, employees, and the communities we’ve served since 1925 as we focus on the next 100 years,” said Ann Teranishi, ASB’s president and CEO. “We are excited about this next chapter for ASB.”

Teranishi will continue to lead ASB, and the current executive leadership team will remain in place, the company said.

The possible sale of ASB was the subject of news reports and speculation for over a year as Hawaiian Electric and other defendants were bombarded with hundreds of lawsuits blaming them for the devastating Aug. 8, 2023, Maui wildfires, which killed 102 people in Lahaina, destroyed the historic seaside town and over 3,000 homes and businesses, and displaced an estimated 12,000 residents.

In August, Hawaiian Electric agreed to pay $1.99 billion over four years to settle claims as part of a $4 billion settlement of over 650 lawsuits alleging the company was responsible for the fire along with the state, the county, Kamehameha Schools, West Maui Land Co., Hawaiian Telcom and Spectrum/Charter Communications.

Insurance companies are fighting the settlement, objecting to a Maui judge’s ruling that would bar the firms from suing the defendants. The state Supreme Court has scheduled oral arguments for Feb. 6.

State Sen. Jarrett Keohokalole (D, Kaneohe-Kailua) welcomed news of the sale.

“The sale of ASB is a significant step by HEI to show that the company and their shareholders are taking responsibility for their financial situation in the wake of the Maui wildfires,” said Keohokalole, who chairs the Senate Committee on Commerce and Consumer Protection, which will consider Hawaiian Electric-related bills in the upcoming legislative session.

“This, combined with their stock sale in September 2024, demonstrates that HEI is taking the concerns of the Legislature and ratepayers seriously,” he said.

He said state senators were concerned after Hawaiian Electric asked for a surcharge on customers’ electricity bills and for liability protections. The main concern, he said, was that Hawaiian Electric customers would be unfairly burdened while the financially struggling company would benefit.

But Keohokalole said Tuesday the deal is a sign of good faith from HEI.

“Our concern last session was adding to the cost of ratepayers’ electrical bills without assurances that Hawaiian Electric’s stockholders were doing their part to absorb the costs. Today’s announcement appears to validate those concerns,” he said in a statement. “It is especially encouraging to hear that the sale is structured to keep local jobs and operations of a local bank in local hands.”

American Savings Bank’s leadership, including Teranishi, also touted the ongoing local connections for the financial institution.

In a letter to ASB customers, Teranishi wrote: “We will continue operating independently, just as we always have, under the same name and local leadership team, with no impact to our customers or teammates.

“You can keep banking as usual through our existing branch and ATM network, as well as our online and mobile banking options. All of our great products and services are still available, and we’ll keep looking for ways to make banking easier and more convenient.”

Teranishi noted that in 2025 the bank will celebrate 100 years of serving the local community.

HEI leaders, meanwhile, said they will continue the company’s “comprehensive review of strategic options” initiated in 2024 through its subsidiary Pacific Current in response to the wildfires’ aftermath.

In November, HEI lifted its warning about the company’s ability to remain in business, stating that a recent capital raise helped mitigate the concerns. Hawaiian Electric Industries had raised so-called going- concern doubts in August after disclosing that it did not have a financing plan in place for its share of the settlement.

With the completion of the sale of most of its stake in ASB, HEI will operate as “a simplified holding company with streamlined strategic focus on its utility, Hawaiian Electric,” the company said Tuesday.

Now that the utility parent owns just 9.9% of the bank, executives said they expect that HEI will no longer be subject to regulation as a savings and loan holding company.

“As we navigate a dynamic time in the banking industry, we are confident selling 90% of ASB to independent investors is the best approach for HEI, ASB and our communities,” Seu said.

HEI shares closed Tuesday on Wall Street at $9.73, down a penny from Monday’s close. In all of 2024, the stock fell about 37%.

At a glance

>> Hawaiian Electric Industries sells 90.1% of subsidiary American Savings Bank to independent investors.

>> No investor owns more than 9.9% of the bank’s common stock, including HEI, which retains a 9.9% stake.

>> New investors include the company’s executive leadership and independent directors.

>> The deal values the bank at $450 million, with the investors buying the 90.1% of ASB common stock for $405 million.

>> About ASB: Hawaii’s third-largest bank with $9.3 billion in total assets.

>> About HEI: The company will operate as a simplified holding company. Hawaiian Electric Co. supplies power to about 95% of the state’s population.

Reuters news service contributed to this report.