A utility dealmaker with experience in mergers, restructuring and bankruptcy will become chief financial officer for Hawaiian Electric Industries next month as HEI and its subsidiaries address legal, financial and political issues related to the deadly Maui wildfires.

HEI plans to pay investment banker Scott DeGhetto more than $1.5 million for a 15-month gig as the company’s executive vice president, chief financial officer and treasurer. Compensation includes an annual base salary of $600,000, a $600,000 signing bonus and $250,000 in moving expenses, plus eligibility to receive other benefits, the company said in a news release.

DeGhetto, who has been working as a managing director for Moelis & Co. in Houston, is scheduled to start Oct. 1, serve as CFO until Jan. 1, 2025 and stay “in an advisory capacity” until April 2025.

DeGhetto will replace Paul Ito, who was promoted to HEI’s CFO position in January following what the company’s 2023 proxy statement called “a broad, national search conducted by the Board and HEI leadership team.” 

Just 10 months later, Ito is out. Instead of guiding the holding company, Ito will take over as CFO for HEI’s Hawaiian Electric Co. subsidiary, replacing retiring CFO Tayne Sekimura on Oct. 1. Ito will replace DeGhetto as HEI’s chief financial officer in January 2025, when DeGhetto’s temp job ends, the company said.

HEI’s chief executive, Scott Seu, praised DeGhetto’s experience.

“Scott brings more than 30 years of experience in the power, utility and renewable energy sectors, and has a successful track record of helping to guide companies through diverse and challenging situations and economic cycles,” Seu said in Monday’s news release. “We look forward to benefiting from his valuable insights and broad experience over the next year.” 

DeGhetto’s LinkedIn bio cites “30 years of experience in power, utility and renewable energy investment banking focusing on mergers, acquisitions, divestitures, capital structure, restructuring and bankruptcy work.”

Can Company “Rig-Fence” Maui Electric?

DeGhetto joins HEI at a critical time. Company shares are trading at around $13.30, compared to a 52-week high of $43.71 before the Aug. 8 Maui fires. Rating agencies have slashed the company’s bond to junk status, meaning it will cost HEI more to borrow money to replace its destroyed infrastructure. And the company faces a growing morass of lawsuits from fire victims and shareholders.

Analysts have compared HEI’s situation to that of Pacific Gas & Electric Co., which was driven into bankruptcy after a series of wildfires and ensuing lawsuits in 2017 and 2018 in California.

“In 2019, Pacific Gas & Electric Company’s (PG&E, Baa3 first mortgage bonds, positive) $30 billion of potential wildfire liabilities far exceeded its roughly $20 billion of book equity, and early indications are that Hawaiian Electric’s potential liabilities in a worst-case scenario may be larger than its $2.4 billion of book equity,” Moody’s Investor Service wrote in a report dated Sept. 8.

Still, HEI’s corporate organizational structure has raised hopes that HEI could limit liability to its island subsidiary Maui Electric. Other subsidiaries include American Savings Bank and utilities serving Oahu and Hawaii island. In a list of frequently asked questions addressed to shareholders on Aug. 18, HEI didn’t rule out the possibility that Maui Electric could be “ring-fenced from the rest of the utility.”

“This is a complex legal question that will take time to work through,” the company said. “The goal is not to restructure the company.”