Hawaiian Electric Industries sells American Savings Bank stock to reduce debt in light of Maui wildfire settlements

Hawaiian Electric Industries Inc. closed on its sale of more than 90% of non-controlling interests in American Savings Bank to independent investors, creating an independent, local bank headquartered in Honolulu.

Hawaiian Electric Industries will retain a 9.9% non-controlling interest in its formerly wholly-owned subsidiary American Savings Bank after its sale to independent investors to continue to participate in the bank’s future growth.

Investors, which include the bank’s executive team and independent directors, each hold a non-controlling ownership stake totaling less than 9.9% of common stock.

For Hawaiian Electric Industries, which supplies power to about 95% of Hawaiʻi’s population through its electric utility Hawaiian Electric, the sale simplifies its strategy and allows more focus on core utility business and regaining financial strength. 

The transaction values the bank at $450 million, with the investors purchasing the 90.1% of American Savings Bank common stock for an aggregate cash consideration of $405 million.

Hawaiian Electric Industries state its plans to use proceeds to reduce debt thereby increasing flexibility for funding wildfire settlement contributions and key utility initiatives while reducing equity needs.

“The sale allows Hawaiian Electric Industries to enhance our focus on the utility as we work to help our state recover from the 2023 Maui wildfires and strengthen the financial and strategic position of our company,” said Scott Seu, President and CEO of Hawaiian Electric Industries. “We intend to use the proceeds to reduce holding company debt, increasing flexibility for how Hawaiian Electric Industries funds the Hawaiian Electric Industries and Hawaiian Electric wildfire settlement contributions and key utility initiatives.”

Last year, state senators cited concerns about Hawaiian Electric asking for a surcharge on customers’ electricity bills and receiving liability protections to help protect the company. 

In the wake of the wildfires in Maui, Hawaiian Electric Industries’ credit rating dropped and was seen as a risky investment. The senators were concerned that these actions could unfairly burden customers while helping a company that was struggling financially.

“Our concern last session was adding to the cost of ratepayers’ electrical bills without assurances that Hawaiian Electric’s stockholders were doing their part to absorb the costs. (This) announcement appears to validate those concerns,”  said state Sen. Jarrett Keohokalole, who chairs the Senate Committee on Commerce and Consumer Protection. “It is especially encouraging to hear that the sale is structured to keep local jobs and operations of a local bank in local hands.”

As Hawaii’s third largest bank with $9.3 billion in total assets, American Savings Bank will continue providing its full range of banking and financial services under its existing brand and name to the Hawaiʻi community, as it has since 1925. 

There will be no changes to branches and employees and the current executive team will remain in place. Customers can continue to bank as usual through the existing branch and ATM network, as well as its online and mobile banking services.

“Everything our customers, communities and teammates love about American Savings Bank will remain the same, and we expect this new ownership structure to provide us with greater flexibility and capacity to invest in our community,” said President and CEO Ann Teranishi. “This marks an exciting new milestone in American Savings Bank’s 100-year history.”