Business Context and Reporting Period
This Form 8-K Current Report, dated September 5, 2025, covers Hawaiian Electric Industries, Inc. (HEI) and its subsidiary, Hawaiian Electric Company, Inc. (Hawaiian Electric). The filing discloses the entry into material definitive agreements regarding credit facilities and the election to redeem outstanding cumulative preferred stock.
Key Financial Metrics and Agreements
Revolving Credit Facilities
- HEI Facility: Increased to $300 million (from $175 million). Includes a $25 million letter of credit sub-facility and a $30 million swingline sub-facility. Term extended to September 5, 2030. Option to increase commitments by up to $50 million.
- Hawaiian Electric Facility: Increased to $300 million (from $200 million). Includes a $40 million letter of credit sub-facility and a $30 million swingline sub-facility. Term extended to September 4, 2026, with potential automatic extension based on regulatory approval. Option to increase commitments by up to $75 million.
- Outstanding Balance: Approximately $25 million in loans from the previous facility remain outstanding under Hawaiian Electric's new facility. No new loans were drawn at closing.
- Interest Rates: Based on Term SOFR, Daily Simple SOFR, or Alternate Base Rate plus an applicable margin tied to corporate issuer ratings.
Preferred Stock Redemptions
HEI and its subsidiaries (Maui Electric and Hawaii Electric Light) elected to redeem all outstanding series of cumulative preferred stock, expected on October 15, 2025, using cash on hand.
- Maui Electric: Series H 7.625% ($100 par, $100 redemption price).
- Hawaii Electric Light: Series G 7.625% ($100 par, $100 redemption price).
- Hawaiian Electric: Series C, D, E, H, J, and K (various rates, $20 par, $21 redemption price); Series I ($20 par, $20 redemption price).
Material Changes and Covenants
The new credit facilities replace the third amended and restated agreements dated May 14, 2021. Key covenant changes include:
- Restricted Payments: HEI is restricted from making dividends, distributions, equity repurchases, and subordinated debt payments until the "Covenant Relief Date."
- Lien Covenants: Allow liens securing debt up to 10% of consolidated net worth/capitalization prior to the Covenant Relief Date, increasing to 15% thereafter.
- Covenant Relief Date: Defined as the earlier of achieving an investment-grade rating or satisfying all payment obligations related to the 2023 Maui windstorm and wildfire tort litigation settlements.
- Rating Downgrades: The facilities do not contain clauses affecting access due to ratings downgrades or broad "material adverse change" clauses.
Guidance, Outlook, and Risks
Management intends to fund the preferred stock redemptions with cash on hand. The filing includes standard forward-looking statements regarding the anticipated redemptions and timing. Risks include market conditions, legal or regulatory requirements, and the uncertainty that redemptions will occur as planned. The companies direct investors to their website and PUC filings for additional information.
Investor Verification Checklist
- Verify the exact aggregate principal amount of preferred stock to be redeemed to assess the total cash outflow impact.
- Confirm the current corporate issuer ratings of HEI and Hawaiian Electric to determine applicable interest rate margins and commitment fees.
- Monitor the status of the 2023 Maui windstorm and wildfire litigation settlements to determine the "Covenant Relief Date" and when dividend restrictions may be lifted.
- Review the full text of the Amended Facilities (Exhibits 10.1 and 10.2) for specific definitions of "Covenant Relief Date" and detailed negative covenants.
- Check for official redemption notices to be sent to preferred stockholders for specific surrender instructions.