Hawaii Public Utilities Commission Approves Hawaiian Electric’s $250M Utility Accounts Receivable Credit Facility

Rhea-AI Summary

On June 27, 2024, Hawaiian Electric, a subsidiary of Hawaiian Electric Industries (NYSE: HE), received approval from the Hawaii Public Utilities Commission (PUC) for a $250 million asset-based lending (ABL) facility. This revolving credit agreement uses certain accounts receivable as collateral and is detailed in HEI's SEC form 8-K filed on May 23, 2024. The approval, expedited at Hawaiian Electric's request, aids in managing liquidity and supports operational activities, especially in light of ongoing litigation related to the Maui wildfires. The PUC’s Decision and Order (number 40866) can be accessed publicly on their website.

Positive

• Approval of a $250 million ABL facility provides Hawaiian Electric with increased financial flexibility.
• The facility supports operational activities and enhances liquidity management, important during ongoing litigation.

Negative

• Dependence on accounts receivable as collateral may indicate liquidity constraints.

Insights

Financial Analyst

The approval of a $250 million credit facility by the Public Utilities Commission for Hawaiian Electric is a significant move, especially given the context of the Maui wildfires litigation. This facility is asset-based, meaning it uses accounts receivable as collateral, which is a common financial strategy that utilities use to ensure liquidity. From a financial perspective, this development provides Hawaiian Electric with added flexibility and security.

Importantly, this arrangement is a revolving credit facility, which means Hawaiian Electric can borrow, repay and reborrow funds, giving them versatility in managing their cash flow. In the short term, this will help address immediate financial needs, including those related to litigation costs and operational expenses. In the long term, maintaining access to such a credit facility can help stabilize the company's finances, potentially reducing the need for more expensive borrowing.

While this move strengthens Hawaiian Electric's liquidity position, investors should keep an eye on the company's overall debt levels and how effectively they manage their receivables to avoid any potential cash flow issues. The company's proactive management of financial resources is a positive sign, but the ongoing litigation could influence future financial stability.

Legal Expert

Hawaiian Electric's acquisition of a $250 million credit facility amidst ongoing litigation from the Maui wildfires highlights the legal complexities the company is navigating. Asset-based lending, particularly using accounts receivable as collateral, is a strategic choice to ensure liquidity while awaiting the resolution of legal proceedings. This setup may protect the company from more severe financial strain while addressing legal costs and other obligations.

From a legal standpoint, the approval by the Public Utilities Commission indicates regulatory support, which can be reassuring for investors. However, the ongoing litigation poses a risk and could potentially lead to significant financial liabilities depending on the outcomes. Investors should monitor any developments related to these lawsuits and how they might impact the company's financial health and legal standing.

Overall, this move by Hawaiian Electric demonstrates a robust legal strategy to balance current obligations and future uncertainties. Nevertheless, the ultimate impact of the litigation will be a key factor to watch.

HONOLULU--(BUSINESS WIRE)-- On June 27, 2024 Hawaiian Electric Company, Inc. (Hawaiian Electric), a subsidiary of Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI), received approval from the Public Utilities Commission (PUC) for an asset-based lending facility credit agreement (ABL Credit Facility Agreement) that allows short-term borrowings of up to $250 million on a revolving basis using certain accounts receivable as collateral. The ABL Credit Facility Agreement is described in detail in HEI’s form 8-K filed with the Securities and Exchange Commission on May 23, 2024.

“We appreciate the PUC’s approval on the expedited schedule Hawaiian Electric had requested. An accounts receivable facility is a tool commonly used by utilities to support their financing needs, and this will help support the important operational work underway by Hawaiian Electric to support safety, resilience and reliability. Hawaiian Electric continues to prudently manage liquidity as we work through the timing and impacts of litigation related to the Maui wildfires, and this facility provides them with additional flexibility,” said Scott Seu, HEI president and CEO.

The PUC’s approval is described in detail in its Decision and Order (number 40866) issued on June 27, 2024, available publicly on the PUC’s website at https://hpuc.my.site.com/cdms/s/.

ABOUT HEI

The HEI family of companies provides the energy and financial services that empower much of the economic and community activity of Hawaii. HEI’s electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii’s population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy. Its banking subsidiary, ASB, is one of Hawaii’s largest financial institutions, providing a wide array of banking and other financial services and working to advance economic growth, affordability and financial fitness. HEI also helps advance Hawaii’s sustainability goals through investments by its non-regulated subsidiary, Pacific Current. For more information, visit www.hei.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240628128880/en/

Mateo Garcia

Director, Investor Relations

Telephone: (808) 543-7300

E-mail: ir@hei.com

Source: Hawaiian Electric Industries, Inc.

FAQ

What did Hawaiian Electric announce on June 27, 2024?

On June 27, 2024, Hawaiian Electric announced that the Hawaii Public Utilities Commission approved their $250 million asset-based lending credit facility.

How much is Hawaiian Electric's new credit facility worth?

Hawaiian Electric's new credit facility is worth $250 million.

What is the collateral for Hawaiian Electric's new credit facility?

The collateral for Hawaiian Electric's new credit facility is certain accounts receivable.

Why is the new credit facility important for Hawaiian Electric?

The new credit facility is important for Hawaiian Electric as it provides additional financial flexibility and aids in managing liquidity, especially during ongoing litigation related to the Maui wildfires.

Where can I find details about Hawaiian Electric's new credit facility agreement?

Details about Hawaiian Electric's new credit facility agreement can be found in HEI's form 8-K filed with the SEC on May 23, 2024.