Hawaiian Electric Industries has nixed a plan to spin off its American Savings Bank subsidiary after utility regulators rejected Hawaiian Electric's sale to an out-of-state energy company.
The spinoff of the $6.1 billion-asset bank was contingent on the sale of Hawaiian Electric to NextEra Energy in Juno Beach, Fla., but the Hawaii Public Utilities Commission vetoed the merger agreement, the companies said in separate press releases Monday. The commission late last week decided that the deal was not in the best interests of the public, according to news reports.
"With the termination of that transaction, the spin-off of [American Savings] is not contemplated at this time," Hawaiian Electric said in its press release.
Moreover, Connie Lau, the chairman and chief executive of Hawaiian Electric and American Savings, was quoted in the release as saying, "ASB will continue to serve and invest in Hawaii, helping residents and businesses grow and prosper."
The utility, which has owned American Savings since 1998, announced its plan to spin off the bank as a publicly traded company in December 2014. Under the merger agreement, NextEra Energy is required to pay Hawaiian Electric a $90 million breakup fee and as much as $5 million for reimbursement of transaction-related expenses.
The Hawaiian banking industry has been in transition recently. This month the $19 billion-asset First Hawaiian Bank in Honolulu, a unit of BNP Paribas, said that it would be spun off and that its shares would be listed on Nasdaq. BNP Paribas said in December that it was exploring alternatives for the bank, including a possible sale or an initial public offering to boost capital.