Troubles Continue for Hawaiian Electric

Troubles are mounting for Hawaiian Electric (HE) as the utility company grapples with the aftermath of the disastrous Maui wildfires. In response to its financial predicament, the company has decided to suspend its quarterly dividend starting in the third quarter, aiming to fortify its cash reserves. Additionally, it has utilized $370 million from its revolving unsecured credit facilities.

Subsequently, following in the footsteps of Moody's and Fitch, S&P Global Ratings has downgraded the utility provider from BB- to B-. This downgrade is based on the expectation that Hawaiian Electric will face challenges in accessing capital markets, which are vital for its long-term success. As a result, the company's stock has plummeted by 22% in premarket trading on Friday, compounding an already significant decline of 70% in the past month.

To make matters worse, Maui County has joined the chorus of those taking legal action against Hawaiian Electric. The county has filed a lawsuit alleging that the company negligently failed to power down equipment on the island despite a warning from the National Weather Service. There are accusations suggesting that the company's downed power lines may have sparked the fires that ravaged the town of Lahaina, resulting in a tragic loss of at least 155 lives. Although Hawaiian Electric has yet to respond to these claims, its public image has been adversely affected as a result.

Given these circumstances, the future appears challenging for Hawaiian Electric. Although the company intends to weather these difficulties and emerge as a financially robust utility, it is constrained by limited access to markets and inadequate lending facilities. Moreover, the reputational damage and legal risks incurred from the Maui wildfires only exacerbate the company's plight. As Hawaiian Electric seeks guidance and support, its resilience will be truly tested in the face of adversity.