Hawaiian Electric Shares Rated In-Line Amid Strategic Sale Efforts

Hawaiian Electric Maintains Steady Position Amid Changes

Recently, Evercore ISI has reiterated its In-Line rating on Hawaiian Electric (NYSE: HE), setting a price target of $16.00. This decision comes as the company navigates through significant discussions involving its subsidiary, American Savings Bank (ASB), which is potentially up for sale.

Context of the Potential Sale of ASB

In the second quarter earnings report, Hawaiian Electric disclosed that it was exploring strategic alternatives for ASB. This exploration has led to a notable pre-tax goodwill impairment of $82 million, which has eliminated the goodwill from ASB's financial records. Previously, ASB had reported approximately $542 million in shareholder equity, down from $624 million due to this adjustment.

Expected Financial Impact of the Sale

The potential sale of ASB is projected to generate between $400 million and $540 million for Hawaiian Electric. With the recent goodwill impairment, the maximum valuation placed on ASB stands firm at $542 million. A formal agreement regarding the sale with Central Pacific Financial could be reached soon, although it is essential to understand that discussions could fall through at any time.

Central Pacific Financial's Position and Objectives

Central Pacific Financial, identified as the fourth-largest bank in Hawaii, is rumored to be in talks with Hawaiian Electric regarding ASB's acquisition. To facilitate this deal, Central Pacific is pursuing to raise $1 billion from various investors, which include notable names like Warburg Pincus and Centerbridge Partners. This fundraising initiative is crucial for the bank as it needs to manage certain unrealized losses in its asset holdings during the transition of ownership.

Investor Concerns and Capital Access

Investors are apprehensive regarding the ongoing court proceedings that could challenge the settlement status and affect Hawaiian Electric’s capital access. However, discussions with the company suggest a confident tone, as they believe they will successfully secure $1.7 billion. This sentiment showcases the company's proactive approach despite external pressures.

Insights into Central Pacific Financial's Performance

As conversations continue around Hawaiian Electric, it’s essential to consider some pertinent financial insights about Central Pacific Financial. Currently, this bank holds a market capitalization of approximately $752.1 million, with a price-to-earnings (P/E) ratio of 12.88, maintaining stability compared to its adjusted P/E ratio of 12.82 from the previous twelve months as of the latest quarter.

Growth Potential and Dividend Reliability

Central Pacific Financial has portrayed a strong financial trajectory, witnessing a 47.39% return over the last six months and an impressive 69.64% return over the past year. These robust figures indicate that the bank is nearing its 52-week high, creating a favorable environment for investors. Additionally, consistently paying dividends for twelve consecutive years reflects the bank's commitment to its shareholders, with a current yield of 3.86% noted from its last recorded dividend, which occurred on a recent ex-date.

Conclusion and Final Thoughts

The potential acquisition of American Savings Bank by Central Pacific Financial is a topic garnering much attention for its implications on both entities involved. As investor outlook brims with cautious optimism amidst ongoing negotiations, the financial positioning and historical performance of Central Pacific may significantly sway investor sentiment. Keeping abreast of these developments will be crucial for those observing the broader implications for both Hawaiian Electric and the financial landscape in the region.

Frequently Asked Questions

What rating did Evercore ISI give Hawaiian Electric?

Evercore ISI maintained an In-Line rating for Hawaiian Electric with a price target of $16.00.

What is the estimated sale price range for ASB?

The potential sale of American Savings Bank is estimated to be between $400 million and $540 million.

Who is Central Pacific Financial?

Central Pacific Financial is the fourth-largest bank in Hawaii, actively pursuing the acquisition of ASB.

What financial performance indicators are notable for Central Pacific?

Central Pacific has shown a strong price increase, with a 69.64% return over the past year, and has maintained a reliable dividend for twelve years.

What are investor concerns regarding Hawaiian Electric?

Investors are worried about ongoing court processes that could impact capital access and the settlement outcomes for Hawaiian Electric.

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