Hawaiian Electric Creditors Hire Davis Polk Amid Wildfire Suits

A group of Hawaiian Electric Industries Inc.’s private placement noteholders is working with law firm Davis Polk & Wardwell to help navigate the potential financial fallout stemming from the devastating wildfires in Maui, according to people with knowledge of the matter.

The company’s securities span across units including Hawaii Electric Light Co., Maui Electric Co. and Hawaiian Electric Co., totaling around $1.3 billion, said separate people familiar, who asked not to be named because they’re not authorized to speak publicly. Brokers including Jefferies Financial Group and Seaport Group have been gauging interest in these rarely traded notes and sending quotes at deeply distressed levels.

A representative for Hawaiian Electric declined to comment. Davis Polk didn’t respond to requests for comment.

Numerous lawsuits have been filed alleging that Hawaiian Electric’s power lines ignited the fires which destroyed much of Lahaina, Hawaii earlier this month. The potential liabilities could reach almost $4 billion if the utility is deemed negligent, according to investment research firm Capstone LLC, which would dwarf the company’s current market capitalization.

Hawaiian Electric said it is seeking advice from various experts, including Guggenheim Securities, in the wake of the wildfire suits.

The utility has been cut to junk by all three major credit ratings firms, with Fitch Ratings estimating that potential liabilities may top $3.8 billion, “representing an existential threat to the company.”

The company’s shares traded at $12.38 at 11:10 a.m. New York time Thursday, down more than 60% since the beginning of the month, leaving the utility with a market capitalization of less than $1.4 billion.

To contact the reporters on this story:
Rachel Butt in New York at rbutt4@bloomberg.net;
Erin Hudson in New York at ehudson26@bloomberg.net

To contact the editors responsible for this story:
Claire Boston at cboston6@bloomberg.net

Boris Korby

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