Finance
Hawaiian Electric Among Companies in $4 Billion Maui Fire Deal
(Bloomberg) — Hawaiian Electric Industries Inc. is among the companies that have tentatively agreed to pay more than $4 billion to resolve hundreds of lawsuits over the wildfires that tore through Maui last year, according to people familiar with the deal.
Most read from Bloomberg
The proposed agreement, which is still awaiting final approval, would settle on behalf of thousands of homeowners and businesses against Hawaiian Electric, which operates the utility on the island, said the people, who declined to be identified because they are not authorized to speak . publicly about the agreement.
Other defendants covered by the preliminary settlement include a unit of cable provider Charter Communications, along with state and local governments. The deal, which has not yet been finalized, could still fail.
Shares of Hawaiian Electric rose 40% to $17.85 in premarket trading as of 5:13 a.m. in New York.
Spokespeople for Hawaiian Electric and Charter Communications declined to comment Thursday on the tentative settlement. A spokesperson for Hawaii’s attorney general also declined to comment, citing a confidentiality agreement. The County of Maui also declined to comment.
The proposed amount is below the estimated capital cost of about $5.5 billion caused by the fires, according to a damage report released last year. The fires damaged or destroyed 2,207 buildings, most of them homes.
It is still unclear how the $4 billion in liability will be distributed among companies and governments, the people said. They noted that Hawaiian Electric will account for about $1.5 billion of the settlement, but other companies’ shares are still being finalized. According to some, the proposed settlement will be paid out over four years.
Insurance claims
It also remains unknown how many homeowners or business owners will receive in financial compensation from the proposed settlement.
Insurers are seeking nearly $2 billion from the settlement fund as reimbursement for claims they have already paid, the people said. Attorneys for homeowners and business owners have responded with an offer of more than $600 million, she added.
The tentative agreement was reached earlier this month through court-ordered mediation sessions, the people said. The judge has not yet approved the proposal.
Unwanted credit ratings
Hawaiian Electric has been criticized for not turning off power in August 2023 despite warnings that dry, blustery winds would create critical fire conditions. The disaster cast a shadow over the company’s financial prospects, causing it to lose more than half of its market value since the fire. Its credit ratings have been reduced to ‘junk’, severely limiting the company’s ability to raise capital.
The utility has admitted that strong winds downed power lines and poles, sparking a small fire near the historic town of Lahaina on the morning of August 8. However, utility executives said firefighters extinguished the blaze and left the site, where a fire later broke out. afternoon when the power was turned off.
Maui County officials will discuss the agreement at a hearing Friday. They have declined to disclose the amount of the proposed deal, but said in local TV news reports that they were open to “a negotiated settlement.” The county sued the utility, claiming it failed to properly prepare equipment for the threat of wildfires. Hawaiian Electric has filed a countersuit blaming the county.
The cases were joined before Judge Peter Cahill for pre-trial information sharing. None of the cases have been brought to trial.
The case is IN RE: Maui Fire Cases, 2CSP-23-0000057, Circuit Court of the Second Circuit, State of Hawaii (Wailuku)
–With help from Bre Bradham and Farah Elbahrawy.
(Updates with market movements of Hawaiian Electric stock in fourth paragraph.)
Most read from Bloomberg Businessweek
©2024 BloombergLP
