Hawaiian Electric shares “could go to zero”

MSN Aug 12, 2024 (excerpt)

 … Hawaiian Electric Industries (NYSE:HE) shares slumped 13.9% in pre-market trading. 

Uncertainty surrounding the proposed global settlement of claims related to the August 2023 Maui wildfires has cast a shadow over the company. Initial optimism surrounding the settlement has waned as challenges to the agreement emerge….

this agreement is contingent upon resolving disputes between wildfire victims and their insurers over subrogation claims—a hurdle that could potentially derail the entire settlement process.

Wells Fargo in a note said  that if the 90-day negotiation period passes without an agreed-upon split between the victims and insurers, or without a court order that shifts the subrogation claims risk away from the defendants and back to policyholders, the settlement could collapse entirely. 

Such an outcome would likely lead to the resumption of tort trials against Hawaiian Electric, further escalating the company's financial risks….

This charge has triggered a "going concern" risk disclosure, signaling that without a clear financing plan, the company could default on certain outstanding debts. 

“If certainty around a capital financing plan to address the payments is not in place prior to when HE’s 10-K filing is due, HE would be in default on certain terms of outstanding debt and lenders would have the option to call it,” said analysts at Wells Fargo….

In the worst-case scenario, where the settlement is not finalized, Wells Fargo warns that Hawaiian Electric’s equity value could plummet to zero….

read … Hawaiian Electric shares plunge 13.9% amid settlement uncertainty (msn.com)

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