Kuokoa Wants To Buy HECO's Parent; It Would Sell American Savings

By Pacific Business News (Honolulu)

A company called Kuokoa Inc. has been formed for the purpose of buying all the shares of Hawaiian Electric Industries and converting the publicly traded company into a private concern.

Honolulu-based Hawaiian Electric Industries is the holding company for American Savings Bank, Hawaiian Electric Co. on Oahu, Maui Electric Co. on Maui and Hawaii Electric and Light Co. on the Big Island.

If successful, Kuokoa CEO Roald Marth said the company would sell American Savings Bank.

Kuokoa is being led by Chairman Richard Ha, who is owner of Hamakua Springs Country Farms on the Big Island; President Ted Peck, who has resigned his position as the stateâ¿¿s energy administrator; and CEO Marth, who is a venture capitalist with an international reputation. Peckâ¿¿s last day as Hawaiiâ¿¿s energy administrator is Friday.

⿿We felt that we had to do this to address the many, if not all, systemic problems that we haven⿿t been able to solve,⿝ said Peck in reference to the state⿿s attempts to move Hawaii off imported fossil fuel.

Kuokoa Inc. was formed four months ago and has about 25 investors, according to Marth, who declined to identify them.

Hawaiian Electric has been unable to become a company primarily fueled by renewable energy sources and controlled energy efficiency measures because of its attempts to earn an acceptable profit for investors, according to interviews with Peck and Marth.

Hawaiian Electric Industries posted a profit of $32.9 million on sales of $694.5 million for the three months ending Sept. 30, according to a filing with the Securities and Exchange Commission. During that quarter, the company paid a 31-cent dividend to its common shareholders. It earned $88.8 million on revenues of $1.9 billion for the first nine months of 2010, and its stock closed Thursday at $23.87 a share, up 6 cents and near its 52-week high of $24.99.

The state and Hawaiian Electric Industries signed the Clean Energy Initiative in 2008, mandating the state achieve 40 percent renewable energy and 30 percent energy efficiency by 2030.

⿿Hawaiian Electric wants to get off of fossil fuels, but they just can⿿t,⿝ Marth said. ⿿They⿿re obligated to paying out dividends [to investors]. A private company doesn⿿t have to pay a dividend, and we won⿿t. We will use that money to transition to [clean energy].⿝

Marth said Kuokoa had drawn up a comprehensive plan that will bring Hawaii to 100 percent renewable energy in 10 years, in contrast to the stateâ¿¿s more moderate goals. The estimate of deploying the plan during the course of 10 years is $35 billion.

Marth estimated that buying all the shares of stock at a premium could cost $3 billion. The company currently has a market value of $2.25 billion.

⿿We want to buy it all,⿝ said Marth. ⿿We want it to be a friendly transition to a private company.⿝

Marth said the goal was not to get rid of the companyâ¿¿s executive leadership or board, whom he praised.

There have been rumors that Mainland companies also have showed interest in taking control of Hawaiian Electric Industries, said Marth.

Peck stressed the importance of retaining local ownership and management of the utilities, as would be the case with Kuokoa.

Robbie Alm, executive vice president of Hawaiian Electric, declined to comment, citing SEC rules. Connie Lau, president and CEO for Hawaiian Electric Industries and chairman of Hawaiian Electric and American Savings Bank, did not immediately return a call for comment.

Copyright 2011 American City Business Journals

http://www.bizjournals.com/pacific/news/2011/01/07/investors-want-to-buy-heco-take-it.html?ana=thestreet

Copyright bizjournals.com 2010

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