Home Cap­i­tal talk­ing to banks, Hibben says

The Hamilton Spectator - - BUSINESS - DOUG ALEXAN­DER

Home Cap­i­tal Group has reached out to Canada’s big banks and other en­ti­ties to re­fi­nance a costly $2 bil­lion loan from the Health­care of On­tario Pen­sion Plan, said Alan Hibben, a for­mer in­vest­ment banker who re­placed founder Ger­ald Soloway on the board of the em­bat­tled Cana­dian mort­gage lender.

“I’m talk­ing to all sorts of en­ti­ties — banks and oth­ers on this,” said Hibben, who was named to Home Cap­i­tal’s board on May 5 to help re­build con­fi­dence at the Toronto-based mort­gage lender. “The re­place­ment on the HOOPP deal is re­ally a debt-like fi­nanc­ing, so we’re look­ing at peo­ple who can ac­tu­ally pro­vide de­posit note-type sup­port to this thing.”

Home Cap­i­tal’s woes in­ten­si­fied last month, when On­tario’s se­cu­ri­ties reg­u­la­tor ac­cused the com­pany of mis­lead­ing in­vestors on the firm’s probe into fal­si­fied mort­gage ap­pli­ca­tions some two years ear­lier.

Home Cap­i­tal has since faced a run on de­posits and plunging shares, forc­ing it to take a loan with terms that in­clude an ef­fec­tive rate of 22.5 per cent on the first $1 bil­lion and con­di­tions that pre­vent the com­pany from tak­ing on more debt or pur­su­ing as­set sales, mergers or a windup with­out per­mis­sion from HOOPP.

“We’ve bought our­selves enough time to run a cou­ple of months, but that’s ob­vi­ously not our time frame on this,” Hibben said in an in­ter­view Mon­day. “I am hop­ing that I can have some de­gree of sta­bil­ity within the de­posit base, be­cause it’s just eas­ier to talk to peo­ple about a deal with bet­ter term and bet­ter terms, if we have some ele­ment of sta­bil­ity un­der­ly­ing the com­pany.”

Home Cap­i­tal’s high in­ter­est sav­ings de­posit bal­ances stood at about $125 mil­lion as of Fri­day, roughly the same as the day ear­lier, the firm said in a state­ment. Avail­able liq­uid­ity and credit ca­pac­ity to­talled about $1.51 bil­lion, in­clud­ing an un­drawn $600 mil­lion un­der the com­pany’s $2 bil­lion credit fa­cil­ity.

Mort­gage fi­nanc­ing firm MCAP Corp. said last week it reached a deal to ser­vice $1.5 bil­lion of Home Cap­i­tal’s mort­gages and re­newals. Hibben said there’s the po­ten­tial to bring in other part­ners or up­size the deal — with­out nam­ing MCAP as the third-party — though he said pri­vate eq­uity play­ers are un­likely.

“There are other play­ers in the mar­ket­place that we are talk­ing to about that,” he said. “We’ve had some very early in­di­ca­tions of in­ter­est in up­siz­ing that, but noth­ing has been done.”

Hibben is a re­tired in­vest­ment banker who once over­saw mergers and acquisitions.

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