Hawaiian Electric Industries Inc. Settles Wildfire Lawsuits for Over $4 Billion
Hawaiian Electric Industries Inc. is one of the companies involved in a tentative agreement to pay more than $4 billion to resolve numerous lawsuits stemming from the devastating wildfires that swept through Maui last year. This proposed settlement, which is still pending final approval, would bring an end to legal actions brought by thousands of homeowners and businesses against Hawaiian Electric, the utility provider on the island.
In addition to Hawaiian Electric, other parties covered by the tentative settlement include a cable unit of Charter Communications, as well as state and local governments. While the deal has not yet been finalized and could potentially fall apart, Hawaiian Electric’s shares saw a significant jump of 51% in postmarket trading following news of the agreement.
It’s worth noting that the proposed settlement amount falls below the estimated $5.5 billion in capital costs incurred as a result of the wildfires. According to a damage assessment report released last year, the blazes caused damage to or destroyed a total of 2,207 structures, with the majority being residential properties.
Despite the progress made in reaching a potential settlement, there are still uncertainties surrounding how the $4 billion liability will be allocated among the various companies and governmental entities involved. While Hawaiian Electric is expected to cover approximately $1.5 billion of the settlement amount, specifics regarding the contributions of other parties are still being ironed out. It’s anticipated that the settlement will be paid out over a four-year period.
One key unresolved issue pertains to the distribution of financial recoveries to homeowners and business owners from the proposed settlement. Insurers are reportedly seeking nearly $2 billion of the settlement fund to reimburse claims already paid out, whereas lawyers representing the affected parties have countered with an offer exceeding $600 million.
The agreement in question was reached following court-mandated mediation sessions earlier this month, though final approval from a judge is still pending. The adverse financial impact on Hawaiian Electric stemming from the wildfires has resulted in a downgrade of its credit ratings to junk status, severely limiting its ability to raise capital.
Maui County officials are scheduled to address the proposed settlement at an upcoming hearing. The county had sued Hawaiian Electric, alleging negligence in preparing equipment for wildfire threats, while the utility provider filed a countersuit blaming the county. Both sets of lawsuits have been consolidated before Judge Peter Cahill, with no trial dates set as of yet.
Stay tuned to Extreme Investor Network for the latest updates on this developing story as it unfolds.
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