Buffett Follows Goldman Model in Bailout for Home Capital
- Buffett’s firm to buy shares, supply C$2 billion credit line
- Alternative lender attempts comeback after regulatory woes
Home Capital Secures $1.5 Billion Buffett Lifeline
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Warren Buffett has become the lender of last resort for Home Capital Group Inc. The billionaire investor agreed to buy shares at a deep discount and provide a fresh credit line for the Canadian mortgage company, tapping a formula he used to prop up lenders from Goldman Sachs Group Inc. to Bank of America Corp.
Buffett’s Berkshire Hathaway Inc. will buy a 38 percent stake for about C$400 million ($300 million) and provide a C$2 billion credit line with an interest rate of 9 percent to backstop the embattled Toronto-based lender, Home Capital said late Wednesday in a statement. The interest on the one-year loan would net Berkshire at least C$180 million if it’s fully tapped.