Home Capital Said in Talks With Banks to Replace HOOPP LoanBy and
Stock rises on report Goldman, Royal Bank considering loan
Lender said to be speaking with several banks for C$2b loan
Home Capital Group Inc., the troubled Canadian mortgage lender, is in talks with a group of banks to secure a C$2 billion ($1.51 billion) loan to replace a costly credit line from a pension fund, according to people familiar with the matter.
The Toronto-based lender is speaking with Canadian banks including Royal Bank of Canada, Bank of Montreal, and Toronto-Dominion Bank, and international lenders Credit Suisse Group AG and Goldman Sachs Group Inc., the people said, declining to be identified as the talks are private.
Home Capital’s executives said on a quarterly conference call last month that replacing the credit line was a priority for the company, which is facing a run on deposits following allegations it misled investors about mortgage fraud.
The company said it would be looking to replace the one-year credit line from Healthcare of Ontario Pension Plan, which cost the company about 22 percent a year on the first half of the loan.
Representatives for all the banks and Home Capital declined to comment or couldn’t immediately be reached.
Reuters earlier reported that the company is seeking an interest rate of 2 percent to 3 percent above the cost of funds, though it’s not clear if they can get those terms.
Home Capital closed 7.4 percent higher at C$12.13 in Toronto trading, after earlier falling 10 percent. The stock has more than doubled from its lows a month ago, though is still down 61 percent this year.
— With assistance by Doug Alexander