Hawaiian Electric Industries Inc. drew down on revolving credit lines and said it would suspend its quarterly dividend as it seeks to shore up cash following the deadly wildfires in Maui.
(Bloomberg) — Hawaiian Electric Industries Inc. drew down on revolving credit lines and said it would suspend its quarterly dividend as it seeks to shore up cash following the deadly wildfires in Maui.
The company said in a regulatory filing that it would suspend the 36-cent per share cash dividend in the third quarter. Next month, it’s contractually obligated to pay a dividend it declared Aug. 3, before the wildfires.
On Wednesday, Hawaiian Electric Industries and its Hawaiian Electric Co. unit drew $170 million and $200 million, respectively, on revolving credit lines. It will use the proceeds to invest “in highly liquid short-term investments,” according to the filing.
Three independent directors who served on the board of Hawaiian Electric Industries and American Savings Bank, which is owned by the utility’s parent company, will serve exclusively on the bank’s board, which “enables these directors to focus solely on the bank’s business.” The company said customer deposits at the bank aren’t at risk from legal claims tied to the fires.
Shares of Hawaiian Electric fell as much as 24% in after-market trading.
Most companies keep rainy-day funds known as revolving credit facilities, paying banks a small fee to maintain access to the cash in case of emergencies. When the lines are undrawn, they don’t count toward a company’s outstanding debt. In March 2020, some of the world’s largest companies drew on their revolvers to have extra cash on hand amid disruptions to their supply chains and softening consumer demand.
Numerous lawsuits have been filed alleging that Hawaiian Electric’s power lines ignited the fires which destroyed much of Lahaina, on the island on Maui, earlier this month. The potential liabilities could reach almost $4 billion if the utility is deemed negligent, according to investment research firm Capstone LLC.
(Updates with additional details throughout.)
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