Home Capital (HCG.TO) (HMCBF)

JackRab said:
So when is this going to collapse? Any ideas? They will easily make the repayment of the 325m bond...

Is it when they are forced to renegotiate on the credit facility? Repay that and get new funds through extremely dilutive rights issue?
More...

A collapse is not guaranteed.

I agree they will easily make the $325 million repayment, however this will reduce liquidity to $545 million + $600 million credit line = $1.145 billion.

Although the pace of overall deposit outflows has slowed in the past week, it looks like liquidity is declining by at least $100 million a week.

Assuming that pace remains, that would leave only about 12 weeks remaining (12 * $100 million = $1.2 billion) until they reach zero.

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So what are the scenarios?

1 - bailout by Canadian Gov... (unlikely, since not a system event)
2 - takeover by larger (unlikely, no-one would be too keen to do that I think)
3 - propped up with more equity through rights issue (likely, very dilutive)
4 - other party buys underlying business with a good discount (also likely, but will destroy the business and more likely to be done when other options fail)

What other options are there for them? That credit facility is just because they are linked with HOOPP through cross-board seats... but that won't last. I doubt it's even legal.
 
Tough to see any positive scenario playing out. Even the most ardent bulls are betting on a buyout of some sort. Not exactly a turnaround play.
 
Why is it still trading at around 9? Market Cap is still about 600 mln...

I would say spot at 9 is a positive scenario. It's not going to hit 20+ anytime soon. But any of the negative scenarios would push the price down to sub 3 if not nill....
 
JackRab said:
Why is it still trading at around 9? Market Cap is still about 600 mln...

I would say spot at 9 is a positive scenario. It's not going to hit 20+ anytime soon. But any of the negative scenarios would push the price down to sub 3 if not nill....
More...

A positive scenario could be some or all of the following:

* The pace of deposit outflows slows to a trickle, and then as time progresses, deposits start to very gradually increase

* Home Capital is able to replace/refinance the $2 billion facility at an interest rate lower than 10%
(or alternatively, the company is able to survive for another 11 months, and then is able to refinance then).

* Canadian housing does not crash, and Home Capital's provision for losses remains low.

* With the company able to finance itself, and with low loan-loss provisions, it is an attractive stock at a discount to book value.

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Mon May 15 announcement (6.30am ET)
data provided in table format in this press release
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-103000862.html

Tue May 16 announcement (4.30pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-203000820.html

Wed May 17 announcement (4.30pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-203000496.html

Thu May 18 announcement (4.30pm ET)
http://www.homecapital.com/press_releases.asp

Fri May 19 announcement (4.30pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-203000247.html

Mon May 22 was the Victoria Day holiday in Canada
https://www.timeanddate.com/calendar/?year=2017&country=27
https://www.timeanddate.com/holidays/canada/victoria-day

Tue May 23 announcement (5.18pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-211800834.html

http://www.homecapital.com/press_releases.asp

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Last edited:
Liquid assets:
Mon May 15: $880 million (May 16 announcement: [$1.48 billion - $600 million])
Mon May 22: $860 million (May 23 announcement: [$1.46 billion - $600 million])

Credit line usage from the $2.0 billion facility:
Mon May 15: $1.40 billion (May 16 announcement)
Mon May 22: $1.40 billion (May 23 announcement)

Tue May 23: $1.65 billion (May 23 announcement)
https://finance.yahoo.com/news/canadas-home-capital-draws-down-230342278.html
"Canada's Home Capital draws down further on credit line"

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Last edited:
HISA balances:
Mon May 15: $120.9 million (May 16 announcement in table)
Mon May 22: $115.0 million (May 23 announcement in table)

Oaken savings accounts:
Mon May 15: $146.1 million (May 16 announcement in table)
Mon May 22: $144.3 million (May 23 announcement in table)

GIC deposits:
Mon May 15: $12.382 billion (May 16 announcement in table)
Mon May 22: $12.333 billion (May 23 announcement in table)

GICs in cashable position:
Mon May 15: $160 million (May 16 announcement in table)
Mon May 22: $144 million (May 23 announcement in table)

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Mon May 15 announcement (6.30am ET)
press release data provided in table format for first time
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-103000862.html

Tue May 16 announcement (4.30pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-203000820.html

Wed May 17 announcement (4.30pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-203000496.html

Thu May 18 announcement (4.30pm ET)
http://www.homecapital.com/press_releases.asp

Fri May 19 announcement (4.30pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-203000247.html

Mon May 22 was the Victoria Day holiday in Canada
https://www.timeanddate.com/calendar/?year=2017&country=27
https://www.timeanddate.com/holidays/canada/victoria-day

Tue May 23 announcement (5.18pm ET)
https://finance.yahoo.com/news/home-capital-provides-liquidity-deposits-211800834.html

Wed May 24 announcement (5.36pm ET)
Company provides details of upcoming mortgage maturities and deposit maturities
https://finance.yahoo.com/news/home-capital-completes-repayment-deposit-213600231.html
http://www.newswire.ca/news-release...uidity-deposits-and-maturities-624159873.html

http://www.homecapital.com/press_releases.asp

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