Hawaiian Electric Industries, Inc. (“HEI”), announced that HEI and its subsidiary, Hawaiian Electric Company, Inc. (“Hawaiian Electric”), and other parties have reached an agreement in principle to settle all tort claims related to the August 2023 wildfires on Maui.
HEI and Hawaiian Electric, the State of Hawai?i, the County of Maui, Kamehameha Schools, West Maui Land Co., Hawaiian Telcom and Spectrum/Charter Communications have agreed on the terms of a proposed settlement with the lead attorneys for individual and class plaintiffs. Under the proposed terms, which remain subject to final documentation and court approval and do not include any admission of liability, the defendants would collectively pay over $4 billion to resolve all tort claims arising from the Aug. 8, 2023 wildfires on Maui. The settlement also would resolve all claims among the defendants. HEI and Hawaiian Electric’s contribution is a total of $1.99 billion (pre-tax) and includes the $75 million previously contributed for the One ?Ohana Initiative, to be paid in four installments.
Scott Seu, President and CEO of HEI, stated, “One of our core values in Hawai?i is the concept of laulima, which means many hands working together. Our Board and management are pleased to have reached this agreement in principle on an expedited basis, which embodies the spirit of this concept as we come together on a path forward. Not only is this good for our community, but we are confident that this settlement represents the best outcome for HEI, as it provides a clear line of sight toward resolution of the wildfire-related tort litigation and increased certainty for our company’s path ahead. In the coming months, we will be focused on finalizing the agreement and regaining the strength of our enterprise.”
Settlement Details
The settlement terms were reached after four months of mediation between the defendants and attorneys representing plaintiffs from Lahaina and Upcountry Maui. At this point, the proposed settlement is an agreement in principle between the defendants and attorneys representing individual and class plaintiffs. The agreement is conditioned on a resolution of the claims of the insurance companies that have paid claims for property loss and other damages, with no additional payments from defendants. Under the terms of the agreement, the individual plaintiffs and insurers have 90 days to reach an agreement on the allocation of the settlement amount between those groups, or have a judge decide that the insurers? exclusive remedy is to seek to recover from the settlement payments made to each of the plaintiffs, among other terms. Once a final settlement agreement is signed, it will take effect following judicial review and approval. The payments would begin after such approval and are expected to be made no earlier than mid-2025.
Financing Update
With the agreement in principle now in place, HEI is moving forward with clarity on the scope of its liabilities related to the Maui wildfire tort litigation. HEI and Hawaiian Electric are working closely with their financial advisors to develop a financing plan for their settlement contribution and intend to finance the settlement payments through a mix of debt, common equity, equity-linked securities, or other potential options, although there can be no assurance at this time as to the availability or terms of any such financing.
HEI will further discuss the settlement in its quarterly earnings call scheduled for Friday, August 9.
