Home Capital (HCG.TO) (HMCBF)

Initial investment: $153,225,739 to buy 16,044,580 shares. ($9.55 per share).
These will be new shares representing 19.99% of the company on a post-issuance basis.

Additional investment
$246,774,261 to buy 23,955,420 shares (approx $10.30 per share).

"On completion of the Additional Investment, Berkshire will have acquired 40 million common shares at an average price of approximately C$10.00 per common share and will indirectly hold an approximate 38.39% economic interest in the Company on a post-issuance basis (62% on a pre-issuance basis)."

Terms of replacement credit agreement:
Interest rate to 9% (previously 10%)

Standby fee on undrawn amounts 1.00% (current 2.5%)

Facility will mature in 1 year (29 June 2018) and may not be terminated until then. (However this replacement facility does not have a commitment fee).

Conference call at 8.30am
(647) 427-7450
1 (888) 231-8191 (toll-free in North America)

also via company web site:
http://www.homecapital.com/investor_relations.asp

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Any idea if Buffet himself made this decision or any one of the other hot shots or fund managers at Berkshire?

This is characteristically un-Buffet to invest in dog piles.

Or is there something else to this? Maybe throwaway some good will in the common, then make a killing on the securitized $2B loan? If no housing collapse, then make money on loan and stock. If housing collapse, via collateral own a bunch of assets and wait out over long term for recovery.

To the layman, this almost looks like a bailout to prevent cards from a major economy from slowly toppling over, as a preemptive move to prevent spillover elsewhere. What's $2B to hedge a $400B portfolio right?
 
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isn't that dilutive to current shareholders???? Shouldn't the stock drop? He's paying 10 and currently it's at 19.... If he pays 10, then surely 19 is massively overvalued...

I don't get 19..... He's buying at 10 while the stock is at 15... then the news comes out and it goes up to 19.... that's ridiculous. Normally when something this dilutive happens, it should drop to what... 11 or 12? So the fact that WB comes in gives the stock a 60-70% boost on top of the 35% rise from early May?

That credit facility is probably a good thing for both... and he bought stock to get voting rights and possibly put someone on the board?
 
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Page for Home Capital press releases:
http://www.newswire.ca/news/home-capital-group-inc

Four press releases (instead of the usual one) since the close of trading on 28 June.

Regular liquidity update:
"Home Capital Provides Update on Liquidity and Deposits"
http://www.newswire.ca/news-release...date-on-liquidity-and-deposits-631380693.html

"Home Capital Provides Update on OSC and Class Action Settlements"
www.newswire.ca/news-releases/home-capital-provides-update-on-osc-and-class-action-settlements-631402223.html

Home Capital Provides Update On Q2 2017 Expenses and GIC Deposit Inflows
http://www.newswire.ca/news-release...penses-and-gic-deposit-inflows-631493853.html

"Home Capital Announces Receipt of TSX Conditional Listing Approval for Initial Equity Investment by Berkshire Hathaway"
http://www.newswire.ca/news-release...vestment-by-berkshire-hathaway-631494803.html

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Page for Home Capital press releases:
http://www.newswire.ca/news/home-capital-group-inc

Three press releases (instead of the usual one) since the open of trading on Thursday June 29.

"Home Capital Announces Successful Completion of Initial Equity Investment by Berkshire Hathaway"
http://www.newswire.ca/news-release...vestment-by-berkshire-hathaway-631546603.html

Regular liquidity update:
"Home Capital Provides Update on Liquidity and Deposits"
http://www.newswire.ca/news-release...date-on-liquidity-and-deposits-631611713.html

"Home Capital Announces Closing of New C$2 Billion Credit Facility and Agreement to Sell Approximately $252 Million of Residential Mortgages"
http://www.newswire.ca/news-release...llion-of-residential-mortgages-631614033.html

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The three main steps that HCG has taken to improve its liquidity are:

29 June
As shown in the previous post, the sale of $252 million of mortgages, for proceeds of $249.6 million.
Sale price equal to 99.07% of principal amount.
Expected closing date: 30 June 2017.
http://www.newswire.ca/news-release...llion-of-residential-mortgages-631614033.html

21 June
Berkshire Hathaway equity investment
http://www.newswire.ca/news-release...new-c2-billion-credit-facility-630038203.html
$153,225,739 proceeds received on 29 June for sale of 16,044,580 shares.
Shareholder approval required for sale of second tranche.

20 June
Sale of $1.2 billion of mortgages to KingSett Capital
http://www.newswire.ca/news-release...ed-at-approximately-12-billion-629627813.html
Initial proceeds expected to be $1.16 billion, with the possibility of receiving additional proceeds based on (lack of) credit losses in the portfolio.
Company said the initial proceeds represent 97% of the principal value of mortgages.
Transaction expected to close in Q3 2017, in two tranches.

Summary of cash received:
29 June: $153,225,739
30 June: $249.6 million (expecting to receive)
no later than 30 September: $1,160,000,000 (expecting to receive this minimum amount)

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