Credit agreements

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Credit agreements and changes in debt

Credit agreements and changes in debt

HEI and Hawaiian Electric each entered into a separate agreement with a syndicate of eight financial institutions (the HEI Facility and Hawaiian Electric Facility, respectively, and together, the Credit Facilities), effective July 3, 2017, to amend and restate their respective previously existing revolving unsecured credit agreements. The $150 million HEI Facility and $200 million Hawaiian Electric Facility both terminate on June 30, 2022. No amounts under the Credit Facilities were outstanding as of December 31, 2019. None of the facilities are collateralized.

The Credit Facilities will be maintained to support each company’s respective short-term commercial paper program, but may be drawn on to meet each company’s respective working capital needs and general corporate purposes.

During the first quarter of 2020, due to the economic effects of the COVID-19 pandemic, access to the commercial paper markets by HEI and Hawaiian Electric, as well as similarly situated borrowers, was not available or not available at reasonable terms. As a result, HEI and Hawaiian Electric elected to draw on their Credit Facilities. As of March 31, 2020, $64.5 million and $95 million were outstanding on the HEI Facility and the Hawaiian Electric Facility, respectively.

Changes in debt - subsequent event.

On April 20, 2020, HEI closed on a $65 million 364-day term loan from a syndicate of two banks. The loan bears interest at a floating rate at HEI’s option of either (i) a rate equal to an alternate base rate as defined in the agreement or (ii) a rate equal to an adjusted London interbank offered rate, as defined in the agreement, plus an applicable margin, and matures on April 19, 2021. The proceeds of the loan were used to pay down the balance on the HEI Facility, which increased the available borrowing capacity on the HEI Facility by $65 million. The loan contains provisions requiring the maintenance by HEI of certain financial ratios substantially consistent with those in HEI’s existing, amended and restated revolving unsecured credit agreement. The loan may be prepaid without penalty at any time, but proceeds from any debt capital market transactions must first be applied to pay down the term loan.

On April 20, 2020, Hawaiian Electric closed on a $75 million 364-day revolving credit agreement (364-day Revolver) with a syndicate of four banks. Under the 364-day Revolver, draws bear interest at a floating rate at Hawaiian Electric’s option of either (i) a rate equal to an alternate base rate as defined in the agreement or (ii) a rate equal to an adjusted London interbank offered rate, as defined in the agreement, plus an applicable margin, requires annual fees for undrawn amounts, and terminates on April 19, 2021. The 364-day Revolver includes substantially the same financial covenant and customary representations and warranties, affirmative and negative covenants, and events of default (the occurrence of which may result

in the loan outstanding becoming immediately due and payable) consistent with those in Hawaiian Electric’s existing, amended and restated revolving unsecured credit agreement.