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Credit agreements and changes in debt | 9 Months Ended
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Sep. 30, 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 will terminate on June 30, 2022. None of the facilities are collateralized. As of September 30, 2020 and December 31, 2019, no amounts were outstanding under the Credit Facilities. 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. Changes in debt. 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 over $50 million must first be applied to pay down the term loan. On September 11, 2020, HEI entered into a $50 million note purchase agreement (HEI NPA) with The Prudential Insurance Company of America and several of its affiliates under which HEI has authorized the issue and sale of $50 million of unsecured senior notes (HEI Notes). Under the HEI NPA, HEI plans to draw $50 million on or before December 29, 2020. The HEI Notes bear interest at a fixed rate of 2.98%, require semi-annual interest payments, and mature December 15, 2030. The HEI Notes include substantially the same financial covenants and customary conditions as the HEI Facility. The proceeds from the HEI Notes will be used to refinance short-term borrowings and for general corporate purposes. The HEI Notes may be prepaid in whole or in part at any time at the prepayment price of the principal amount, together with interest accrued to the date of prepayment plus a “Make-Whole Amount,” as defined in the agreement. On September 28, 2020, Ka‘ie‘ie Waho Company, LLC (KWCL), a wholly owned indirect subsidiary of HEI, entered into a $13 million non-recourse term loan agreement with Bank of Hawaii. The proceeds of the loan were used to acquire a 6-MW solar photovoltaic facility on Kauai, which serves as collateral for the loan. The loan bears interest at a rate equal to LIBOR, as defined in the agreement, plus 2.00%, matures September 28, 2031, and requires the maintenance of a minimum debt service coverage ratio equal to at least 1.10 to 1.0. The loan requires quarterly principal and monthly interest payments, which total approximately $0.4 million per quarter. 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. As of September 30, 2020, Hawaiian Electric had no amounts outstanding on this revolving credit agreement. On May 14, 2020, the Utilities issued, through a private placement pursuant to separate note purchase agreements (NPAs), the following unsecured senior notes bearing taxable interest (May Notes):
|  | Series 2020A |  | Series 2020B |  | Series 2020C
Aggregate principal amount |  | $80 million |  | $60 million |  | $20 million
Fixed coupon interest rate |  |  |  |  |  |
Hawaiian Electric |  | 3.31% |  | 3.31% |  | 3.96%
Hawaii Electric Light |  | 3.96% |  |  |  |
Maui Electric |  | 3.31% |  | 3.96% |  |
Maturity date |  |  |  |  |  |
Hawaiian Electric |  | 5/1/2030 |  | 5/1/2030 |  | 5/1/2050
Hawaii Electric Light |  | 5/1/2050 |  |  |  |
Maui Electric |  | 5/1/2030 |  | 5/1/2050 |  |
Principal amount by company: |  |  |  |  |  |
Hawaiian Electric |  | $50 million (Green Bond) |  | $40 million |  | $20 million
Hawaii Electric Light |  | $10 million |  | — |  | —
Maui Electric |  | $20 million |  | $20 million |  | —
The May Notes include substantially the same financial covenants and customary conditions as Hawaiian Electric’s credit agreement. Hawaiian Electric is also a party as guarantor under the NPAs entered into by Hawaii Electric Light and Maui Electric. All of the proceeds of the May Notes were used by Hawaiian Electric, Hawaii Electric Light and Maui Electric to finance their capital expenditures and/or to reimburse funds used for the payment of capital expenditures. The May Notes may be prepaid in whole or in part at any time at the prepayment price of the principal amount, together with interest accrued to the date of prepayment plus a “Make-Whole Amount,” as defined in the agreement. On May 19, 2020, Hawaiian Electric paid off and terminated the $100 million term loan credit agreement dated as of December 23, 2019. In addition, Hawaiian Electric entered into a 364-day, $50 million term loan credit agreement that matures on April 19, 2021. The term loan credit agreement 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. The loan may be prepaid without penalty at any time, but proceeds from any debt capital market transactions over $75 million must be first applied to pay down the term loan. Hawaiian Electric drew the full $50 million on May 19, 2020. Changes in debt-subsequent event. On October 29, 2020, the Utilities executed, through a private placement pursuant to separate NPAs, unsecured senior notes bearing taxable interest (October Notes) as shown in the table below. Funding for this transaction will occur on or before January 15, 2021, with a written notice to each purchaser at least seven business days prior to receiving funds.
|  | Series 2020B |  | Series 2020C |  | Series 2020D |  | Series 2020E
Aggregate principal amount |  | $15 million |  | $40 million |  | $30 million |  | $30 million
Fixed coupon interest rate |  |  |  |  |  |  |  |
Hawaiian Electric |  |  |  |  |  | 3.28% |  | 3.51%
Hawaii Electric Light |  | 3.28% |  | 3.51% |  |  |  |
Maui Electric |  |  |  | 3.51% |  |  |  |
Maturity date (from funding) |  |  |  |  |  |  |  |
Hawaiian Electric |  |  |  |  |  | 20 years |  | 30 years
Hawaii Electric Light |  | 20 years |  | 30 years |  |  |  |
Maui Electric |  |  |  | 30 years |  |  |  |
Principal amount by company: |  |  |  |  |  |  |  |
Hawaiian Electric |  | — |  | — |  | $30 million |  | $30 million
Hawaii Electric Light |  | $15 million |  | $15 million |  | — |  | —
Maui Electric |  | — |  | $25 million |  | — |  | —
The October Notes include substantially the same financial covenants and customary conditions as Hawaiian Electric’s credit agreement. Hawaiian Electric is also a party as guarantor under the NPAs entered into by Hawaii Electric Light and Maui Electric. The Utilities did not obtain any of the proceeds at execution and intend to obtain funding at a later date, on or prior to January 15, 2021, at which time it will be used to finance their capital expenditures and/or to reimburse funds used for the payment of capital expenditures. The October Notes may be prepaid in whole or in part at any time at the prepayment price of the principal amount plus a “Make-Whole Amount.”

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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