Hawaiian Electric stock is cut to JUNK status by S&P after lawsuits alleged it caused deadly Maui wildfires by failing to shut off power to downed lines

Hawaiian Electric stock has been given a junk rating by S&P after lawsuits allege the company is responsible for the deadly wildfires on Maui.

S&P’s move comes after shares fell nearly 40 percent in early trading Monday to a 13-year low amid a growing investigation into whether the utility’s equipment played a role in the fires.

The proposed class action lawsuits were filed in state courts on Saturday and are designed to represent thousands of Hawaii residents affected by the devastating fires that have left thousands homeless and Lahaina in ruins.

Lahaina residents claimed in one of the lawsuits that Hawaiian Electric is responsible for the fires after they failed to shut down power lines despite warnings from the National Weather Service that high winds could topple those lines and spread rapidly spreading could cause forest fires.

“By failing to shut off power during these dangerous fire conditions, Defendants caused the loss of life, serious injuries, the destruction of hundreds of homes and businesses, the displacement of thousands of people, and damage to many of Hawaii’s historic and cultural sites.” said the statement. said plaintiffs in the lawsuit, which includes gross negligence and private nuisance claims.

An S&P press release on Tuesday morning said the company was downgraded to BB- in light of the lawsuits. The junk rating means analysts believe the company poses a greater risk.

The rating update said: ‘These class action lawsuits add to the uncertainty and risk to the company.

“Both the Pacific Disaster Center and FEMA have estimated that the cost of rebuilding Hawaii after these wildfires could exceed $5.5 billion, significantly exceeding (Hawaiian Electric Industry’s) book assets of approximately $2.2 billion.” .

“While the full resolution of these lawsuits could take years, the company’s financial measures would deteriorate significantly if plaintiffs prevail.”

Shares in the company reached $18.70 on Monday, the lowest level since February 2010, just after the opening bell.

The cause of the fire is still under investigation. Hawaiian Electric did not immediately respond to a request for comment Monday.

Several reports have surfaced detailing allegations that the company’s failure to properly maintain its network led to the disaster. Videos have also surfaced on Facebook claiming to show power lines entangled in overgrown trees and vegetation.

Videos have also surfaced on Facebook claiming to show power lines entangled in overgrown trees and vegetation

Hawaiian Electric Industries’ stock price has fallen since the wildfires, and the company has been sued by Maui residents who say the fires were caused by failure to maintain the power grid. S&P downgraded the stock to BB-

On Friday, before the lawsuits were filed, the company said it is working with the county to investigate what happened.

“There is an uncertainty that the cause of the fires in Maui can be attributed to Hawaiian Electric. That has not yet been proven, so there is the fear in the market. It’s a ‘shoot first, ask questions later,'” Thomas Hayes, chairman of Great Hill Capital, said of investors.

A Washington Post report over the weekend raised questions about whether Hawaiian Electric, owner of the utility company Maui Electric, had not taken adequate safety precautions amid warnings days before the fires broke out that gusty winds would create dangerous fire conditions.

Jim Kelly, vice president of Hawaiian Electric, told CNN on Sunday, “At this early stage, the cause of the fire has not been determined and we will work with the state and county in conducting their investigation.”

He added that Hawaiian Electric has no formal shutdown program and must be closed with first responders as a precaution, CNN reported.

The investigation caused Wells Fargo and Morningstar to lower their price targets for Hawaiian Electric.