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Investing.com -- S&P Global Ratings has upgraded Hawaiian Electric Industries Inc . (NYSE:HE) and its subsidiaries to ’B+’ from ’B-’ and placed them on CreditWatch with positive implications.
The two-notch upgrade follows several favorable court decisions that increase the likelihood of finalizing the $4 billion global settlement related to the 2023 Maui wildfire litigation.
On Wednesday, the Second Circuit Court of Hawaii granted preliminary approval to the class settlement and certified the class. Earlier, on May 28, the court approved the individual plaintiffs’ plan of distribution, setting a timeline for claims submission starting Monday with an October 1 deadline.
The court also granted defendants’ motion for a good faith settlement determination and denied a motion by certain subrogation insurers to intervene in the class case.
In May, Hawaii’s legislature passed House Bill 1001, appropriating approximately $807.5 million from the state’s general fund to pay Hawaii’s share of the global settlement.
S&P Global Ratings stated these developments significantly reduce credit risks for Hawaiian Electric and its subsidiaries by limiting the company’s liability exposure related to the Maui wildfires at $1.99 billion.
The CreditWatch positive placement reflects the high probability that Senate Bill 897, which establishes liability caps on wildfire-related economic damages and approves securitization for financing wildfire mitigation investments, will become law in the coming weeks.
While individual plaintiffs can opt out of the settlement by September, S&P believes this risk is limited due to the high inconvenience and cost of doing so. The global settlement allocates $500 million to potentially address plaintiff opt-outs.
Hawaiian Electric is expected to continue focusing on reducing wildfire risk. In June, Hawaiian Electric Co. Inc. filed an updated three-year safety strategy with Hawaii’s Public Utilities Commission to spend approximately $350 million over the next three years on grid hardening, asset inspections, vegetation management, and increasing installation of weather stations and hazard-detection cameras.
The company is also expected to continue refining its public safety power shutoff program, established in July 2024, to mitigate wildfire risk.
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