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UPDATE 1-Home Capital to get C$2 bln credit facility from Berkshire Hathaway

Published 2017-06-21, 11:59 p/m
© Reuters.  UPDATE 1-Home Capital to get C$2 bln credit facility from Berkshire Hathaway
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June 21 (Reuters) - Canadian lender Home Capital Group Inc HCG.TO said Berkshire Hathaway (NYSE:BRKa) Inc BRKa.N will provide a new C$2 billion line of credit to its unit Home Trust Co and indirectly buy C$400 million ($300.2 million) of its common shares in a private placement.

Berkshire, through its unit, will hold an about 38.39 percent equity stake in the company after buying 40 million shares at an average price of about C$10.00 per common share, Home Capital said on Wednesday.

The company will make an initial investment of C$153.2 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. 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 Chief Executive Officer.

The C$2 billion loan facility will replace the existing one for a similar amount between Home Trust Company and a major institutional investor.

The 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 2017.

Berkshire will not be granted any rights to nominate directors of Home Capital or any governance rights as an equity holder, Home Capital said.

In June, the company said it would sell a portfolio of commercial mortgage assets valued at C$1.2 billion to bolster its liquidity and trim outstanding debt on a C$2 billion emergency facility it agreed with the Healthcare of Ontario Pension Plan in April. = 1.3323 Canadian dollars)

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