HONOLULU - Hawaiian Electric Industries, Inc. (NYSE: NYSE:HE) has completed a stock offering, raising approximately $558 million in net proceeds, the company announced today. The offering involved newly issued shares priced at $9.25 each. The funds are earmarked for a contribution towards a potential settlement in the Maui wildfire litigation and for general corporate purposes.
The utility company is preparing to make its first settlement payment of roughly $478 million, which is not due until mid-2025. This initial payment is part of a larger $1.91 billion obligation that Hawaiian Electric Industries and its subsidiary, Hawaiian Electric, face in connection to the wildfire case. The full amount is to be paid over four years after adjusting for a $75 million credit from a prior contribution to the One 'Ohana Initiative.
Scott Seu, President and CEO of HEI, commented on the financial move, stating, "We are taking a proactive approach to funding our settlement contribution, and securing this financing so quickly after entering the settlement agreement in principle – and well ahead of any payment coming due – is a testament to our progress and ability to deliver on our commitments."
The settlement in question is still under negotiation, with a final agreement yet to be signed. The proposed settlement, currently an agreement in principle between the defendants and representing attorneys, will require judicial review and approval to take effect.
Hawaiian Electric Industries, Inc. is a key player in Hawaii's economic and community activities, providing essential energy and financial services. Its electric utility subsidiary serves approximately 95% of Hawaii's population and is actively working towards decarbonizing its operations to support the state's sustainability goals. Additionally, through its banking subsidiary, American Savings Bank, and non-regulated investments by Pacific Current, HEI contributes to Hawaii's economic growth and sustainability initiatives.
This news is based on a press release statement. The company's forward-looking statements involve predictions and are subject to risks, uncertainties, and the accuracy of assumptions. These statements are not guarantees of future performance, and the company does not commit to updating them publicly except as required by federal securities laws.
In other recent news, Hawaiian Electric Industries has announced a $500 million common stock offering, with additional options for underwriters to purchase $75 million more. The proceeds are intended to cover the company's contributions to the Maui wildfire settlement and for general corporate purposes. Wells Fargo Securities and Barclays Capital are serving as the joint lead book-running managers, with Guggenheim Securities also partaking in the offering.
Hawaiian Electric has also agreed to pay approximately $1.99 billion as part of a legal settlement related to the Maui wildfires, although the company has not admitted any legal liability. Payments are expected to commence from mid-2025, pending judicial review and approval. The company reported a second-quarter net loss of $1.30 billion, largely due to a wildfire-related charge of $1.71 billion.
Evercore ISI has maintained its In Line rating for Hawaiian Electric, even amid ongoing court proceedings. The company is exploring strategic options for its American Savings Bank unit and is addressing a "going concern" risk, needing to secure $1.7 billion in financing before filing its annual financial statements by the deadline of March 3, 2025. The contract of Temporary Chief Financial Officer Scott DeGhetto is set to conclude on January 1, 2025, with Paul Ito resuming his previous position as CFO.
InvestingPro Insights
Hawaiian Electric Industries, Inc. (HE), known for its essential role in Hawaii's energy sector and contribution to the state's sustainability initiatives, has recently undertaken a strategic financial move to support its settlement obligations. With a current market capitalization of $1.11 billion, the company's financial health is critical for investors to monitor, especially considering the substantial settlement payments it faces.
InvestingPro data highlights a challenging financial landscape for HE, with a negative P/E ratio of -0.95 for the last twelve months as of Q2 2024, indicating that the company has not been profitable during this period. This is further underlined by a gross profit margin of -29.79%, suggesting that the company has been struggling to turn revenues into actual profit. Moreover, the company's stock has experienced significant volatility, as reflected by a 14.55% dividend yield and a one-week price total return of -17.91%, underscoring the high-risk nature of this investment.
Two key InvestingPro Tips for Hawaiian Electric Industries provide further insight into the company's financial challenges. The company operates with a significant debt burden, which could pose difficulties in making interest payments on its debt. Additionally, the stock has taken a considerable hit over the last week, aligning with the data on its recent price performance. These factors are crucial for investors to consider when evaluating the company's ability to meet its settlement obligations and maintain its dividend payments, which it has done for 53 consecutive years.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available at InvestingPro's website, which could provide further guidance on HE's financial health and investment potential. For example, analysts predict the company will be profitable this year, a potential sign of recovery that investors may want to follow closely. With the next earnings date scheduled for November 7, 2024, stakeholders will be keen to see if these predictions hold true and how the company plans to navigate its financial future.
Visit InvestingPro for more detailed analysis and to explore the full list of tips that could help inform investment decisions regarding Hawaiian Electric Industries.
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