Home Capital to get C$2 billion loan from Berkshire Hathaway

TORONTO: Home Capital Group Inc said billionaire Warren Buffett’s Berkshire Hathaway Inc will provide a new C$2 billion ($1.50 billion) line of credit to its unit Home Trust Co, ending the Canadian lender’s strategic review process.
Berkshire will also indirectly buy C$400 million of Home Capital’s common shares in a private placement through its unit Columbia Insurance Co, Home Capital said.
“Home Capital’s strong assets, its ability to originate and underwrite well-performing mortgages, and its leading position in a growing market sector make this a very attractive investment,” said Warren Buffett, Berkshire chairman and CEO.Berkshire will hold an about 38.39 per cent equity stake in Home Capital after buying 40 million shares at an average price of about C$10.00 per common share.
Berkshire will make an initial investment of C$53.2 million to buy 16 million common shares and an additional investment of C$246.8 million to purchase 24 million shares through a private placement.
The additional investment is subject to shareholder approval, while the initial investment will not require approval from shareholders.
Canada’s biggest non-bank lender also said it will continue to explore further asset sales and financing deals over the next year, but has concluded its strategic review process that began in April.
“This investment from Berkshire not only addresses Home Capital’s near-term requirements for additional liquidity and a lower-cost credit agreement, but also facilitates what the Board feels is the best available path to long-term success,” Home Capital’s Chair Brenda Eprile said. Berkshire will not be granted any rights to nominate directors to Home Capital board or any governance rights as an equity holder, Home Capital said.— Reuters