They were great shareholders Home Capital bids adieu to Warren Buffett as

first_img Facebook Barbara Shecter What you need to know about passing the family cottage to the next generation December 19, 20183:37 PM EST Filed under News FP Street “We are delighted to see Home Capital back on its feet with healthy liquidity and a solid capital position,” Buffett said in the statement Wednesday. “Although we have decided to substantially exit from our investment, we will continue to cheer from the sidelines for our friends at Home.”Yousry Bissada, Home Capital’s chief executive, said in an interview that he was disappointed Buffett’s group would not remain due to their investment size criteria. But he added that his company is on much more solid footing both financially and operationally than when Berkshire first invested, even as rising interest rates and new stress-testing criteria for home-buyers is shrinking the mortgage lending pie.“We’re disappointed they’re not (remaining invested) but it’s fine,” Bissada told the Financial Post.“They were great shareholders and helped us when we needed them the most…. We’ve grown a lot, we’re profitable, we’re doing a lot of business in the industry.”Berkshire Hathaway tendered shares into Home Capital’s previously announced substantial issuer bid, which will see the company repurchase or cancel almost 23 per cent of its issued and outstanding shares.The issuer bid was run as a so-called “modified Dutch auction” with offer prices ranging from $16.50 to $18.50. About 26 million shares were tendered by the deadline of Dec. 18. The offer was oversubscribed, so those who tendered are expected to have about 83 per cent of their successfully tendered shares purchased by Home Capital.It is understood that Berkshire tendered its entire stake.“We are pleased that the strength of our balance sheet and our business put us in a position to create value by returning this capital to our shareholders,” Bissada said. “This transaction offered liquidity to the shareholders who participated while being significantly accretive to the rest of our shareholders.”Hugo Chan, chief investment officer of Kingsferry Capital, a Home Capital investor, said Wednesday that he pushed for approval of Berkshire’s larger investment back in 2017 so Buffett would have more “skin in the game” and reason to stick around as a long-term investor.“I don’t think Berkshire would have exited Home Capital so early if they were a 40-per-cent-plus shareholder,” Chan told the Post on Wednesday, noting that Kingsferry didn’t tender any of its shares.“However, with that said, Home Capital — with the new management team and board — has proven that they will do just fine without Berkshire’s help,” Chan added.Chan called the market reaction “very irrational” and said Home Capital shares were trading at “ridiculously cheap” levels on Wednesday. Warren Buffett, the world-renowned investor whose firm Berkshire Hathaway shored up confidence in Home Capital Group when regulatory concerns combined with activist short-selling triggered a run to withdraw deposits, has “decided to substantially exit” from his investment in the Canadian mortgage-lender.The news sent shares of the Toronto-based Home Capital tumbling on Wednesday morning, dipping by more than 15 per cent to $13.45 before regaining some ground.We will continue to cheer from the sidelines for our friends at HomeWarren Buffett Last year, Warren Buffett came to Home Capital’s rescue.Andrew Harrer/Bloomberg Share this story‘They were great shareholders’: Home Capital bids adieu to Warren Buffett as Berkshire Hathaway moves to substantially cut stake Tumblr Pinterest Google+ LinkedIn Twitter advertisement Join the conversation → Comment More Featured Stories Email In a statement released by Home Capital, Buffett said Berkshire Hathaway’s investment was “not of a size to justify our ongoing involvement.”In September of 2017, shareholders of Home Capital rejected Buffett’s plan to increase Berkshire Hathaway’s initial $153 million investment by a further $247 million — which would have boosted his stake to 38.4 per cent from 19.9 per cent — primarily due to the dilution such an investment would cause.Only 11.21 per cent of votes cast were in favour of the additional investment. At that time, an industry veteran speculated that Buffett, known for his long-term investing strategy, would be less inclined to remain committed to such a small investment.‘Like the perfect storm’: An FP Investigation into the events that took Home Capital to the brinkHome Capital plans to keep rebuilding the lender after Buffett’s second tranche rejectedISS recommends Home Capital shareholders vote against the second equity placement to Warren Buffett’s Berkshire HathawayIn June of 2017, “when some were questioning Home’s staying power,” Berkshire Hathaway had pledged both equity and credit in excess of $2 billion.In Home Capital’s statement Wednesday, in which Buffett’s group disclosed it would “substantially exit” from its equity investment, Berkshire noted that the Canadian mortgage lender had fully repaid the credit line, which was replaced this year by a cheaper $500 million backstop provided by two Canadian banks.They were great shareholders and helped us when we needed them the mostHome Capital CEO Yousry Bissada ← Previous Next → ‘They were great shareholders’: Home Capital bids adieu to Warren Buffett as Berkshire Hathaway moves to substantially cut stake News sends shares tumbling Sponsored By: 0 Comments Redditlast_img read more

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