According to insiders, Warren Buffett's Hawaiian Electric Industries Inc. and other companies have tentatively agreed to pay over $4 billion to resolve hundreds of lawsuits related to last year's Maui wildfire disaster. Hawaiian Electric's stock price surged 50.11% to $19.14 in after hours trading.
It is reported that the total amount of $4 billion is lower than the previously expected compensation, and the damage assessment released last year showed a need for $5.5 billion in fire compensation. On August 8, 2023, a rare fire broke out on the island of Maui in Hawaii, USA, causing almost complete destruction of the historic town of Lahaina and leaving thousands of households homeless.
Hawaii Power Company has been accused of work negligence, failure to take appropriate measures to prevent disasters, and lack of management over the years. Later, the government of Maui County, Hawaii, sued Hawaii Power Company, accusing the company of negligence in failing to cut off power during hurricanes and dry weather, which led to devastating forest fires.
It is understood that Hawaii Power Company provides electricity to 95% of the state's areas. Since the outbreak of the fire, the company's stock has experienced a fierce sell-off, with the stock price plummeting by over 75% at one point.
The agreement has not been officially finalized yet
However, the above-mentioned informed sources said that the proposed agreement is still awaiting final approval. The other defendants covered by the interim settlement agreement include a division of cable television provider Charter Communications, as well as state and local governments. Moreover, this yet to be finalized transaction may still be at risk of collapse.
Insiders say it is currently unclear how the $4 billion debt will be distributed between the two companies and the government. However, they pointed out that Hawaii Power Company will pay a settlement of approximately $1.5 billion, but the amounts required by other companies are still being finalized. According to some informed sources, the proposed settlement amount will be paid within four years.
Furthermore, it is currently unclear how much financial compensation homeowners or business owners will receive from the proposed settlement. Insiders say that the insurance company is requesting nearly $2 billion from the settlement fund as compensation for the claims they have already paid. They added that the lawyers of the homeowners and business owners have submitted a bid of over $600 million.
It is reported that earlier this month, the two parties reached a preliminary agreement through a court mediation meeting, but the judge has not yet approved the proposal.