Electric utility company Hawaiian Electric (NYSE: HE) continued to plummet in pre-market trading on Friday after being hit by a lawsuit and suspending its dividends. The company has lost more than 70% of its stock value in the past month. Maui County has filed a lawsuit against the company alleging negligence on the part of Hawaiian Electric for failing to adequately maintain their power infrastructure during a windstorm that led to multiple fires on August 8.
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The lawsuit, which is seeking unspecified damages, asserts that despite a National Weather Service warning of dangerous conditions, the utility didn’t proactively cut power. This caused downed and energized lines to spark the fires.
But the company’s troubles don’t end there. Hawaiian Electric is also facing a securities fraud lawsuit, citing compromised safety protocols that led to “the precipitous decline in the market value of the company’s securities.”
Meanwhile, Hawaiian Electric has suspended its quarterly cash dividends beginning in the third quarter of this year to “increase its cash position.” The company needs cash to rebuild and restore power in fire-ravaged Maui.
HEI and Hawaiian Electric have drawn $170 million and $200 million, respectively, under their existing unsecured revolving credit facilities to strengthen their balance sheet.
In another blow for the company, S&P has downgraded the company’s credit rating to ‘B-‘ from ‘BB-,’ placing it on CreditWatch.
Analysts remain sidelined about HE stock with a Hold consensus rating based on three Holds and one Sell.
