Home Capital to sell assets to pay loans
ONTARIO: Home Capital Group Inc confirmed it is considering asset disposals to enable it to refinance more quickly and pay off an emergency loan provided by the Healthcare of Ontario Pension Plan.
Shares in Canada’s biggest nonbank lender fell by as much as 20 per cent in early trading on Friday before paring losses to trade down 11.6 per cent at 1230 EST.
After the stock market closed on Thursday, Home Capital issued first-quarter results in which it said uncertainty around future funding had cast doubt about whether it could continue as a going concern.
Depositors have withdrawn nearly 94 per cent of funds from Home Capital’s high-interest savings accounts since March 27, when the company terminated the employment of former Chief Executive Martin Reid.
The withdrawals accelerated after April 19, when Canada’s biggest securities regulator, the Ontario Securities Commission, accused Home Capital of making misleading statements to investors about its mortgage underwriting business.
Home Capital relies on deposits from savers to fund its lending to borrowers, such as self-employed workers or newcomers to Canada, who may not meet the strict criteria of the country’s biggest banks.
Home Capital was in talks to divest about Cad$2 billion in assets to help pay down a high-interest loan, according to people familiar with the situation.
The lender needs to raise funds to help repay a Cad$2 billion loan from Healthcare of Ontario Pension Plan, which provided the high-interest line of credit last month.