: Hawaiian Electric Industries’ stock slides 23% as S&P downgrades credit to reflect risk from wildfire-related lawsuits

Hawaiian Electric Industries Inc.’s stock HE tumbled 23% Tuesday, after class-action lawsuits were filed against the company and its subsidiaries following the devastating wildfires on Maui. S&P Global Rating downgraded the rating to BB- and placed it on CreditWatch negative, meaning the rating agency could downgrade it again in the near term. S&P estimates that the fires have destroyed 2,200 structures and said FEMA has put the damages at more than $5.5 billion, or more than twice the company’s book equity of $2.2 billion. The lawsuits have increased the risk of a material deterioration in HEI’s credit quality, should the plaintiffs prevail, said the agency “The severity of these wildfires demonstrate higher wildfire risk for the company than previously contemplated,” said S&P. “The wildfires destroyed a significant segment of HEI’s customerbase that will take many years to restore, and as such, we expect a long-term weakening in the company’s profitability measures, despite the company’s useof a revenue decoupling mechanism for normal sales volume variations.” The stock has fallen 61% in the year to date, while the S&P 500 SPX has gained 16%.

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