Buffett firm bails out distressed lender
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 $300 million and provide a $3 billion credit line with an interest rate of 9 percent to backstop the distressed Toronto-based lender, Home Capital said late Wednesday in a statement. The interest on the one-year loan would net Berkshire at least $280 million if it's fully tapped.
"While the terms of the new credit line with Berkshire Hathaway remain harsh, we believe the purpose of this loan is to motivate Home Capital's management to bolster their own funding sources," said Hugo Chan, chief investment officer at Kingsferry Capital in Shanghai, which owns shares in Home Capital. "This again shows Mr. Buffett's masterful capital allocation skills," said Chan, citing his investment motto: "Be greedy when others are fearful."
The financial backing from Buffett sent the stock 27.2 percent higher Thursday on the Toronto Stock Exchange. Buffett has buoyed some of the biggest U.S. corporations in times of trouble, including a combined $8 billion injection to prop up Goldman Sachs and General Electric Co. when credit markets froze during the 2008 financial crisis.
-- Bloomberg News
WhistlePig Whiskey to take swig of bids
WhistlePig Whiskey, maker of the rye whiskey that was voted world's best, is exploring a sale after receiving takeover interest and has invited potential suitors to submit formal bids, according to people familiar with the situation.
Talks about a sale of the Vermont-based company are in early stages and they may not lead to a deal, said the people, who asked not to be identified because the information is private. A representative for WhistlePig didn't immediately respond to a request for comment.
The brand is run by founder Raj Bhakta and board members Wilco Faessen, a Barclays PLC managing director, and Chris Evison, the chief investment officer of Quadrant Capital Advisors. WhistlePig's top whiskey: Black Prince Rye Whiskey, which retails for $349 a bottle, won this year's San Francisco World Spirits Competition prize for best rye whiskey.
Distillers have ramped up takeovers of small-batch U.S. whiskey producers recently as Americans increasingly drink local brands at higher price points.
In December, Pernod Ricard SA announced it was acquiring Smooth Ambler, a West Virginia-based company that makes Old Scout bourbon. Constellation Brands Inc. also acquired Utah's High West Distillery, which makes bourbon and rye whiskey, last year.
-- Bloomberg News
Long-term mortgage rates decline a bit
WASHINGTON -- Long-term U.S. mortgage rates dropped slightly this week.
Mortgage buyer Freddie Mac said the benchmark 30-year, fixed-rate mortgage averaged 3.90 percent, down from 3.91 percent last week. The rate stood at 3.56 percent a year ago and averaged a record low 3.65 percent in 2016.
The 15-year, fixed-rate home loan, popular with homeowners seeking to refinance their mortgages, also fell -- to 3.17 percent from 3.18 percent. A year ago, the 15-year rate was 2.83 percent.
The rate on five-year, adjustable-rate mortgages decreased to 3.14 percent from 3.15 percent. It was 2.74 percent a year ago.
Mortgage rates have remained low even though the Federal Reserve has been raising short-term rates: The Fed last week ratcheted rates higher for the third time in six months.
To calculate average mortgage rates, Freddie Mac, the Federal Home Loan Mortgage Corp., surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
-- The Associated Press
Liquidation seen likely for Sears Canada
Sears Canada Inc., the struggling offshoot of Sears Holdings Corp., sought court protection from creditors to carry out a restructuring plan after it ran short of cash.
The retailer is aiming to exit court proceedings as soon as possible this year, Sears Canada said in a statement Thursday. An order was granted by the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act, which allows it to stay in business while a recovery plan is worked out, according to a separate statement.
The filing will likely lead to a liquidation, with the business sold off in pieces, Bloomberg previously reported, citing a source close to the proceedings.
The court order allowed Sears Canada to obtain debtor-in-possession financing of $340 million, according to the company, which also said it's closing 20 full-line locations and 15 Sears Home Stores, 10 Sears Outlet and 14 Sears Hometown locations. About 2,900 jobs will be cut from the retail network and at the corporate head office in Toronto, Sears Canada said.
The move represents the most high-profile setback yet to the Sears retail empire overseen by billionaire hedge-fund manager Eddie Lampert. Together with Sears Holdings, Lampert controlled the majority of shares in Sears Canada.
-- Bloomberg News
FCC proposes $120M fine for robocalls
NEW YORK -- The Federal Communications Commission is proposing a $120 million fine for a scheme that appeared to trick consumers into buying vacation packages that were not what they had expected.
The agency said Miami resident Adrian Abramovich, through his companies, dialed up consumers with calls that appeared as though they were from the same area code. People who picked up the phone heard a recording saying they could get a vacation package from well-known travel companies like Marriott, Expedia, Hilton and TripAdvisor. Instead, unaffiliated call centers then pushed low-quality travel deals.
The agency said Abramovich's companies made nearly 97 million robocalls from October-December 2016.
The FCC said the $120 million penalty is the largest in its history.
The AP was not immediately able to reach Abramovich.
-- The Associated Press
Business on 06/23/2017