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Key Takeaways
- Hawaiian Electric Industries said it might not be able to continue as a going concern because of payments needed to cover a legal settlement from the 2023 Maui wildfires.
- The company and its Hawaiian Electric unit don’t have a plan in place to cover the $1.71 billion litigation costs.
- The company reported a second-quarter loss of $1.3 billion, mostly related to expenses from the fires.
Shares of Hawaiian Electric Industries (HE), or HEI, sank Monday after the utility operator warned it may not be able to continue operations because of the potential inability to pay the money required from the legal settlement reached related to the massive 2023 wildfire in Maui, blamed in part on its Hawaiian Electric unit.
The company said it and Hawaiian Electric don’t have a financing plan in place to cover the $1.71 billion in damages accrued in the second quarter. It explained that until that plan is developed and implemented, “HEI and Hawaiian Electric will disclose a ‘going concern’ risk in their financial statements.”
In its report, HEI added that both firms were working closely with their financial advisors to develop a way to raise the cash, and “intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options.” However, it pointed out that there is “no assurance” that the financing will come through.
HEI Posts Q2 Loss of $1.3B When Profit Expected
The news came as HEI posted a second-quarter net loss of $1.3 billion, or $11.74 per share, while analysts surveyed by Visible Alpha had anticipated a profit of $66.6 million, or $0.60 per share. Along with the $1.71 billion loss attributable to the wildfire litigation costs, it also had an $82.2 million loss from a goodwill impairment at its American Savings Bank (ASB) division, and $9.8 million of other Maui wildfire-related expenses.
Hawaiian Electric Industries shares plummeted 17% to $12.75 as of 10:10 a.m. ET Monday to move into negative territory for 2024.