HEI - Hawaiian Electric Industries Inc.
11/05/2024 | Press release | Distributed by Public on 11/05/2024 13:53
Material Agreement Form 8 K
Item 1.01 Entry into a Material Definitive Agreement.
Effective November 1, 2024, Hawaiian Electric Industries, Inc. ("HEI") and Hawaiian Electric Company, Inc. ("Hawaiian Electric") entered into two definitive settlement agreements (collectively, the "Settlement Agreements") to settle the tort litigation (expressly excluding securities and derivative actions) arising out of the 2023 Maui windstorm and wildfires, including the fires in Lahaina, Kula, and Olinda (the "Maui Windstorm and Wildfires"), on a global basis without any admission of liability. The Settlement Agreements were entered into in furtherance of the Settlement Term Sheet attached as Exhibit 99.2 to the Form 8-K filed with the SEC on August 5, 2024. Under the Settlement Agreements, subject to certain conditions (including those described below), HEI and Hawaiian Electric (collectively, the "Companies"), along with other defendants (the State of Hawaii, the County of Maui, Kamehameha Schools, West Maui Land Co., Hawaiian Telcom and Spectrum/Charter Communications (collectively, the "Defendants")) have agreed to settle the claims of those who filed lawsuits in state and federal courts, or who may have claims but have not yet filed lawsuits, in connection with the Maui Windstorm and Wildfires. One Settlement Agreement is between Defendants, class counsel, and class plaintiffs (the "Class Settlement Agreement"), and the other is between Defendants and over 30 lawyers representing numerous individual plaintiffs who have brought their own lawsuits (the "Individual Settlement Agreement"). The Settlement Agreements do not resolve claims with insurers who have asserted or could assert subrogation claims in separate lawsuits and such insurers are not parties to the Settlement Agreements, but resolving such claims in the manner set forth in the Settlement Agreements is a condition that must be satisfied before any payment is due from Defendants. Both Settlement Agreements remain subject to court approval and other conditions, including those set out below.
Under the Settlement Agreements, HEI and Hawaiian Electric are obligated to contribute a total of $1.99 billion, which includes $75 million previously contributed for the One 'Ohana Initiative, which is to be divided between two settlement funds, one for the benefit of individual plaintiffs, and the other for the benefit of the class plaintiffs. The Companies must pay such amounts in four equal annual installments of $478.75 million, with the first installment expected to be made no earlier than the fourth quarter of 2025. The Companies have the option to accelerate the payments, in whole or in part, with such accelerated payments to be discounted at a rate of 5.5% per annum. HEI has agreed to transfer the amount of the first payment, $478.75 million, into a new subsidiary, which is restricted from disbursing such funds except in connection with the initial payments to the settlement funds.
The Class Settlement Agreement provides releases by plaintiffs to the Defendants, and among Defendants, for acts and omissions relating to the Maui Windstorm and Wildfires. The Individual Settlement Agreement provides that individual plaintiffs who elect to accept the settlement will sign releases. The releases in the Settlement Agreements, including those among Defendants (subject to certain conditions), are effective on the initial payment due date. The Settlement Agreements also provide that $500 million of the total settlement payments will be reserved and made available to Defendants to defray the cost to resolve any claims brought by non-participating plaintiffs. The Settlement Agreements are intended to resolve all of the tort claims related to the Maui Windstorm and Wildfires. Defendants have the right to terminate the Settlement Agreements under certain circumstances, including if more than specified thresholds of plaintiffs choose not to participate in the settlement.
The Settlement Agreements contain multiple conditions that must be met before any payment from the Companies to the settlement funds are due. Those conditions include, among others, resolving claims of the insurers (either through agreement or a final court order stating that the insurers cannot maintain independent lawsuits against the Defendants), legislation appropriating money from the state, and court approval of the Settlement Agreements.
The foregoing descriptions of the Settlement Agreements do not purport to be complete and are qualified in their entirety by reference to the full text of the Class Settlement Agreement and Individual Settlement
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Agreement attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated herein by reference. The full text of the Settlement Agreements will also be available on HEI's website, www.hei.com. The information on HEI's website is not incorporated by reference in this document.