On Thursday, Evercore ISI maintained its In-Line rating and $9.00 price target for Hawaiian Electric (NYSE:HE).
The company is involved in a legal proceeding related to a Maui wildfire, with recent developments indicating a move toward settlement. The parties have agreed to dismiss the federal class action lawsuit voluntarily, with plans to refile the complaint in state court. This dismissal is seen as a step forward in the settlement process.
The plaintiffs, representing those affected by the wildfire, will include the state of Hawaii as a party in their state court filing. This move is part of the settlement strategy and is considered a positive development by Evercore ISI. Insurers who were seeking to intervene in the federal case, preferring it for its perceived impartiality, will now have to contend with the case in a state forum.
The insurers had aimed to be part of the class certification or to present other legal challenges at the federal level. They argued that the federal court would offer a more neutral venue than the state court. However, the stipulation to dismiss includes provisions to preserve the option to move the case back to federal court if the settlement does not proceed as planned.
The current legal maneuvers come ahead of a significant date in the related proceedings. On the upcoming Monday, November 4, the plaintiffs and defendants are required to submit their opening briefs. These briefs will address reserved questions in a case before the Hawaii Supreme Court, which is separate from but related to the wildfire lawsuit.
The final decision on whether the federal lawsuit can be terminated rests with US District Court Judge Jill Otake. Her ruling will determine if the case will indeed shift to the state court system as part of the ongoing settlement efforts.
In other recent news, Hawaiian Electric has been at the center of several significant developments. The company has agreed to pay approximately $1.99 billion as part of a legal settlement related to the Maui wildfires, despite not admitting any legal liability. Payments are expected to commence from mid-2025, pending judicial review and approval.
Hawaiian Electric reported a second-quarter net loss of $1.30 billion, largely due to a wildfire-related charge of $1.71 billion.
Hawaiian Electric has announced a $500 million common stock offering, with additional options for underwriters to purchase $75 million more. Wells Fargo Securities and Barclays Capital are serving as the joint lead book-running managers, with Guggenheim Securities also participating in the offering.
The company has also successfully raised approximately $558 million from a previous stock offering, which is set to contribute towards the potential settlement in the Maui wildfire litigation and for general corporate purposes.
InvestingPro Insights
As Hawaiian Electric (NYSE:HE) navigates through its legal challenges, InvestingPro data offers additional context to the company's financial situation. The company's market capitalization stands at $1.64 billion, reflecting the market's current valuation amidst the ongoing legal proceedings.
Hawaiian Electric's financial performance has been under pressure, as evidenced by its negative P/E ratio of -1.43 over the last twelve months as of Q2 2024. This indicates that the company has been operating at a loss, which aligns with the challenges mentioned in the article.
An InvestingPro Tip suggests that Hawaiian Electric's dividend payments have been inconsistent, which could be a concern for income-focused investors given the current legal and financial situation. Despite this, the company currently offers a high dividend yield of 14.4%, although investors should approach this with caution given the company's financial performance.
Another relevant InvestingPro Tip notes that Hawaiian Electric's earnings per share have declined in recent years, which correlates with the negative financial metrics and the ongoing legal issues discussed in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 14 additional tips for Hawaiian Electric, providing a deeper understanding of the company's financial health and prospects.
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