5 · Short-term borrowings

As of December 31, 2017, HEI had $63 million of outstanding commercial paper, with a weighted-average interest rate of 2.5% and Hawaiian Electric had $5 million of outstanding commercial paper, with a weighted-average interest rate of 2.3%. As of December 31, 2016, HEI and Hawaiian Electric had no commercial paper outstanding.

On October 6, 2017, HEI entered into a 364-day, $125 million unsecured loan agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd., which includes substantially the same financial covenant and customary conditions as the loan agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd. and U.S. Bank, National Association that matured on the same date. On October 6, 2017, HEI drew a $125 million Eurodollar loan for a term of 364 days at resetting 1-month interest periods, with interest rates that ranged from 1.99% to 2.14% through December 31, 2017. The proceeds from this loan were used to pay off a $125 million long-term loan maturing on the same date. Further, $75 million of this loan was repaid in November 2017 with proceeds from a $150 million long-term loan (described in Note 6 below).

As of December 31, 2017, HEI and Hawaiian Electric maintained syndicated credit facilities of $150 million and $200 million, respectively (see description of credit agreements below). Both HEI and Hawaiian Electric had no borrowings under their respective facilities during 2016 and 2017. None of the facilities are collateralized.

In December 2017, HEI entered into three letters of credit in the aggregate amount of $6.7 million on behalf of Hamakua Energy.

Credit agreements. 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 Facilities), effective July 3, 2017, to amend and restate their respective previously existing revolving unsecured credit agreements. The $150 million HEI Facility extended the term of the facility to June 30, 2022. The $200 million Hawaiian Electric Facility has an initial term that expires on June 29, 2018, but its term will extend to June 30, 2022 upon approval by the PUC during the initial term, which approval is currently being requested.

Under the Facilities, draws would generally bear interest, based on each company’s respective current long-term credit ratings, at the “Adjusted LIBO Rate,” as defined in the agreement, plus 1.375% and annual fees on undrawn commitments, excluding swingline borrowings, of 20 basis points. The Facilities contain provisions for pricing adjustments in the event of a long-term ratings change based on the respective Facilities’ ratings-based pricing grid, which includes the ratings by Fitch, Moody’s and S&P. Certain modifications were made to incorporate some updated terms and conditions customary for facilities of this type. The Facilities continue to contain customary conditions that must be met in order to draw on them, including compliance with covenants (such as covenants preventing HEI’s/Hawaiian Electric’s subsidiaries from entering into agreements that restrict the ability of the subsidiaries to pay dividends to, or to repay borrowings from, HEI/Hawaiian Electric; and a covenant in Hawaiian Electric’s facility restricting Hawaiian Electric’s ability, as well as the ability of any of its subsidiaries, to guarantee additional indebtedness of the subsidiaries if such additional debt would cause the subsidiary’s “Consolidated Subsidiary Funded Debt to Capitalization Ratio” to exceed 65%).

Under the HEI Facility, it is an event of default if HEI fails to maintain an unconsolidated “Capitalization Ratio” (funded debt) of 50% or less or if HEI no longer owns Hawaiian Electric or ASB. Under the Hawaiian Electric Facility, it is an event of default if Hawaiian Electric fails to maintain a “Consolidated Capitalization Ratio” (equity) of at least 35%, or if Hawaiian Electric is no longer owned by HEI.

The 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.