- Special Projects
Some pills are easier to swallow with a spoonful of euphemistic language.
Such is the case in the proposed sale of Hawaiian Electric Industries to Florida-based NextEra Energy.
Company officials have carefully crafted their public messages to make the $4.3 billion deal go down easier in Hawaii, where residents can be quite sensitive to losing control of anything to the mainland, a lingering hangover from the United States overthrowing the kingdom in 1893.
They are framing the transaction as a “partnership” between the two companies that will benefit everyone — shareholders, ratepayers, even the environment.
That may all hold true, considering the vast resources NextEra brings to the table. But the parties are not exactly being forthright by calling the deal a “partnership” or “combination” as they have in full-page newspaper ads, press conferences and letters to hundreds of thousands of customers.
After all, when a sale is completed, the buyer is the owner.
During a press conference announcing the deal Dec. 3, HEI President and CEO Connie Lau and NextEra Chairman and CEO Jim Robo were asked how the media should describe the transaction.
Lau likened it to a “marriage and dating.” Robo called it “a combination of Hawaiian Electric with NextEra.”
Alan Oshima, president and CEO of Hawaiian Electric Company, one of HEI’s subsidiaries, recently sent letters to Oahu customers about the deal.
He explained how NextEra and HEI had “agreed to combine” and talked about what this “combination” will mean for the business. He described the opportunity that joining with NextEra presented and how “we’re gaining a great partner.”
The letter ends by encouraging customers to check out the website, www.forhawaiisfuture.com, where more of the same language is present.
The transaction is technically a merger, not unlike what happened when Honolulu became a one-newspaper town in 2010 when the Star-Bulletin, owned by Black Press, bought the Advertiser, owned by Gannett.
The Honolulu Star-Advertiser emerged. Many employees from both papers were retained and many were let go, but control shifted entirely to Black Press.
“Our two companies are indeed combining resources and expertise, and we see ourselves as partners in achieving a more affordable clean energy future for Hawaii.” — A.J. Halagao, HECO
In the deal between NextEra and HEI, NextEra has agreed to assume $1.7 billion in HEI debt and pay a one-time special cash dividend to HEI shareholders that’s estimated at $3.5 billion.
The deal needs approvals from shareholders, the Hawaii Public Utilities Commission, Federal Energy Regulatory Commission and a couple of other agencies, a process that is expected to be completed within a year.
But at the end of the day, if the transaction goes through as expected, HEI will be a wholly owned subsidiary of NextEra.
The deal guarantees that none of the 2,800 people who work for HEI will lose their jobs involuntarily for at least two years after the transaction is completed. Beyond that, there’s far less certainty.
NextEra and HEI officials have said that HEI and its three subsidiaries — HECO, Maui Electric and Hawaii Electric Light — will keep their names and continue to be headquartered in Hawaii.
NextEra plans to establish a local Hawaiian Electric advisory board, but it’s unclear who will serve on it, how the members will be chosen or by whom.
The issue of who will control the company, which serves roughly 450,000 customers and provides electricity for 95 percent of all the residents of Hawaii, was presented most clearly in a presentation to investors: “Hawaiian Electric will be NextEra Energy’s third principal business reporting directly to the NextEra Energy chairman and CEO.”
When asked for clarification on what the transaction between NextEra and HEI really is, HEI corporate and community advancement manager A.J. Halagao sent this statement:
“NextEra Energy is acquiring Hawaiian Electric Industries (HEI). Following completion of the merger, Hawaiian Electric Company (Hawaiian Electric) will become one of three principal subsidiaries of NextEra Energy, along with Florida Power & Light and NextEra Energy Resources. Hawaiian Electric will continue to be headquartered in Hawaii and operate as Hawaiian Electric. Hawaiian Electric will also continue to be locally managed, and will have a local advisory board. Our two companies are indeed combining resources and expertise, and we see ourselves as partners in achieving a more affordable clean energy future for Hawaii.”