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Subsequent event - HECO (Hawaiian Electric Company and Subsidiaries)

3 Months Ended

Mar. 31, 2012

Hawaiian Electric Company and Subsidiaries

10 · Subsequent event

On April 19, 2012, HECO, MECO and HELCO issued through a private placement taxable unsecured senior notes (the HECO Notes, MECO Notes and HELCO Notes, and together, the Notes) in the aggregate principal amounts of $327 million, $59 million and $31 million, respectively, as follows:

(in thousands)
Long-term debt, net
HECO, 3.79%, series 2012A, due 2018	$	30,000
HELCO, 3.79%, series 2012A, due 2018	11,000
MECO, 3.79%, series 2012A, due 2018	9,000
HECO, 4.03%, series 2012B, due 2020	62,000
MECO, 4.03%, series 2012B, due 2020	20,000
HECO, 4.55%, series 2012C, due 2023	50,000
HELCO, 4.55%, series 2012B, due 2023	20,000
MECO, 4.55%, series 2012C, due 2023	30,000
HECO, 4.72%, series 2012D, due 2029	35,000
HECO, 5.39%, series 2012E, due 2042	150,000
Long-term debt, net	$	417,000

All proceeds of the Notes, except the Series 2012E of the HECO Notes, have been applied ($267 million in the aggregate), together with such additional funds as are required, to defease or redeem special purpose revenue bonds and refunding special purpose revenue bonds issued by the Department of Budget and Finance of the State of Hawaii for the benefit of the utilities, which outstanding bonds have an aggregate principal amount of $271 million and stated interest rates ranging from 5.45% to 6.20%.

The note agreements contain customary representations and warranties, affirmative and negative covenants, and events of default (the occurrence of which may result in some or all of the Notes becoming immediately due and payable) and provisions requiring the maintenance by HECO and each of MECO and HELCO of certain financial ratios generally consistent with those in HECO’s existing amended revolving noncollateralized credit agreement.

All of the Notes may be prepaid in whole or in part at any time at the prepayment price of the principal amount of the Notes plus payment of a “Make-Whole Amount.” Each of the note agreements also (a) requires the utilities to offer to prepay the Notes (without a Make-Whole Amount) in the event that HEI ceases to own 100% of the common stock or other securities of HECO that is ordinarily entitled, in the absence of contingencies, to vote in the election of HECO directors unless, at the time of such cessation of ownership and at all times during the period of 90 consecutive days thereafter, the long-term unsecured, unenhanced debt of HECO maintains an investment grade rating by at least one rating agency or, if more than one rating agency rates such indebtedness, then by each such rating agency, and (b) permits the utilities to offer to prepay Notes (without a Make-Whole amount) in the event of a sale of assets that would otherwise constitute a covenant default.

HECO’s consolidated long-term debt was reduced at the end of the first quarter of 2012 as a result of the defeaseance on March 30, 2012 of $57.5 million of 4.95% refunding special purpose revenue bonds issued for the benefit of HECO and its subsidiaries and maturing on April 1, 2012.