‘The end of an eventful chapter in the corporation’s history’

Continued from FP1

Industry watchers suggest companies like Home Capital, who lend money to home buyers whose credit history doesn’t qualify for mortgage loan from a big bank, are most vulnerable to policy and regulatory changes aimed at cooling Canada’s hot housing market.

Buffett indicated last month that a rejection by shareholders of his plan to take a larger stake in Home Capital would not be cause for him to walk away from the investment.

“We knew that could go either way,” he said on Bloomberg Television. “We’d like to buy the stock but if they vote it down, if the shareholders vote it down, we’ll be fine.”

But Johnson, who met Buffett over 20 years ago when the renowned global investor was looking at an opportunity in Canada, said it’s not clear how committed Berkshire will remain in what amounts to a very small investment, despite his reputation as a longterm investor.

“Only time Johnson said.

One Home Capital investor who was in favour of Berkshire taking the larger position in the Canadian lender said Tuesday he plans to remain for the long term.

“Despite the unfavourable result from the vote, we continue to believe Home Capital has a bright future ahead with the renewed management and board, a well-capitalized balance sheet, and strong support from Berkshire Hathaway,” Hugo Chan, chairman and will tell,” chief investment officer of Kingsferry Capital Management Group Ltd., said in an emailed statement to the Financial Post.

Berkshire’s investment was seen as a lifeline for Home Capital, which faced a crisis of confidence last spring amid executive departures and regulatory accusations of misleading disclosure to shareholders. Skittish depositors pulled their money out, choking off the pipeline of new mortgage loans and forcing the company to take on very expensive debt.

Last month, Home Capital agreed to pay $29.5 million to settle with the Ontario Securities Commission and also settle a class-action lawsuit related to the same disclosure issues about falsified loan applications in its broker channel.

At Tuesday morning’s meeting, Eprile noted that there had also been asset sales and new executive appointments in the past few months to shore up resources and move forward.

Home Capital recently reported that it has $4.22 billion in liquidity, including a $2 billion line of credit from Berkshire Hathaway.

“This meeting marks the end of an eventful chapter in the corporation’s history,” she said.

A statement issued by Home Capital after the meeting said the company respects the decision of shareholders. In it, Eprile reiterated the view that the vote sent “a clear message that the majority of ... shareholders believe that Home Capital’s improved deposit inflows and liquidity position diminish the need for additional capital.”