Exclusive: Class-action lawsuit challenged Hawaiian Electric sale

Exclusive: Class-action lawsuit challenged Hawaiian Electric sale
Published: Dec. 15, 2014 at 11:44 PM HST|Updated: Dec. 16, 2014 at 4:49 AM HST
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A class-action lawsuit challenging the sale of Hawaiian Electric Industries to Florida-based NextEra Energy alleges that HEI's board undervalued the company.

The suit also accuses board members of not seeking competing offers when it inked the multibillion dollar deal.

(HEI's board) failed to maximize shareholder value and to protect the interests of HEI's shareholders," said the suit, which was filed by Madisonville, La. lawyer Michael Palestina and local attorney James Bickerton.

"Instead, defendants engaged in a process that was designed to benefit NextEra and secure material personal benefits for themselves.

In the deal, NextEra agreed to pay $3.5 billion, excluding debt. That comes to $33.50 per share, or about 19 percent above the trading price when the deal was announced.

But the lawsuit noted that some Wall Street analysts valued the stock at up to $35 per share.

The suit also alleges that board, as well as senior managers, will receive lucrative payouts from the deal.

According to HEI's proxy filing, CEO Constance Lau will get nearly $8 million if she's not retained by Next Era while Chief Financial Officer James Ajello will get about $2.3 million. Chief Administrative Officer Chet Richardson will walk away with about $1.9 million.

"It's very lucrative for people at the top," said Henry Curtis of Life of the Land.

An HEI spokesman said the company is confident that the deal "is in the best interest of the company" and its stakeholders.

Experts say say the deal could force NextEra to pay a higher price. But they believe the courts and regulators will ultimately approve the deal.

"They're going to have to address this before going forward. The lawsuit is to try to slow it down or eliminate this from occurring at all," said Terry Lee, president of Lee Financial Group.

"(But) I find it difficult to see any breach of financial responsibility."

This is the first of what could be several shareholder lawsuits ... which could add further delays to the megadeal.

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