Strug­gling mort­gage lender Home Cap­i­tal says it’s in no rush to sell

The Hamilton Spectator - - BUSINESS - ALEXANDRA POSADZKI

TORONTO — Cash-strapped al­ter­na­tive lender Home Cap­i­tal Group says it has a num­ber of in­ter­ested buy­ers and in­vestors, but sell­ing it­self or its as­sets is not the com­pany’s pri­or­ity.

“We do have a num­ber of peo­ple who are in­ter­ested in giv­ing us fi­nan­cial sup­port and/or mak­ing a strate­gic in­vest­ment or ac­qui­si­tion in the com­pany,” board di­rec­tor Alan Hibben said dur­ing a con­fer­ence call to dis­cuss Home Cap­i­tal Group’s first-quar­ter re­sults. “I don’t want to say though that we’re rush­ing in or­der to take that, be­cause I think some of the steps that we’re tak­ing are go­ing to pro­vide a bit of a floor.”

Shares of Home Cap­i­tal slumped 15.45 per cent to close at $9.14 in Fri­day trad­ing on the Toronto Stock Ex­change.

The prospects of a takeover or as­set sales are be­ing closely watched by fi­nan­cial mar­kets af­ter Home Cap­i­tal was hit last month by al­le­ga­tions from staff at On­tario’s se­cu­ri­ties watch­dog that the lender mis­led in­vestors in its han­dling of a scan­dal in­volv­ing fal­si­fied loan ap­pli­ca­tions. The com­pany has said the al­le­ga­tions are with­out merit.

The al­le­ga­tions spurred cus­tomers to pull de­posits, which Home Cap­i­tal uses to fund its mort­gage lend­ing. On Thurs­day, Home Cap­i­tal warned ma­te­rial un­cer­tainty ex­ists re­gard­ing its fu­ture fund­ing ca­pa­bil­i­ties as a re­sult of rep­u­ta­tional con­cerns “that may cast sig­nif­i­cant doubt upon the com­pany’s abil­ity to con­tinue as a go­ing con­cern.”

Ear­lier this week, Home Cap­i­tal an­nounced that it plans to sell up to $1.5 bil­lion of its mort­gage as­sets to an in­de­pen­dent third party.

Home Cap­i­tal did not iden­tify the third party buyer dur­ing the call, which saw di­rec­tors and ex­ec­u­tives pep­pered with ques­tions from an­a­lysts. But the com­pany did say the buyer was some­one they had done busi­ness with in the past.

Asked if Home Cap­i­tal is plan­ning to sell more of its mort­gage as­sets, Hibben said it’s look­ing to other so­lu­tions first. “You don’t shrink your way to great­ness,” said Hibben, a for­mer RBC ex­ec­u­tive who joined Home Cap­i­tal’s board ear­lier this month as part of a push to re­new gov­er­nance and re­store in­vestor con­fi­dence.

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