Home Capital Group Inc. (TSX:HCG) (“Home Capital” or the “Company”) (TSX:HCG) is pleased to announce that its subsidiary, Home Trust Company, has obtained a letter of commitment for a two-year, $500 million standby secured funding facility (the “Credit Facility”) from two Canadian Schedule 1 banks.
The Credit Facility will replace a $2 billion credit facility provided by a wholly owned subsidiary of Berkshire Hathaway Inc. that matures at the end of June 2018. The Company does not intend to draw on the Credit Facility in the ordinary course of business as its current liquidity profile provides sufficient liquidity and funding for its business activities. Any draws on the Credit Facility will be secured against a portfolio of mortgages originated by Home Trust Company.
Brad Kotush, Executive Vice President and Chief Financial Officer, commented: “This Credit Facility is better aligned with our current liquidity and funding profile and results in a lower aggregate cost than the existing credit facility it is replacing. We have significantly reduced our reliance on demand deposits for funding. This facility will provide us with standby liquidity in excess of the Company’s current and planned demand deposit exposures when combined with our current level of liquid assets.”
The terms of the Credit Facility include a 0.75% upfront commitment fee, a 0.60% annual standby charge on any unused portion, and an interest rate on the drawn portion equal to 3-month CDOR plus 150 basis points. The new Credit Facility is expected to close, subject to satisfaction of closing conditions, immediately after the maturity of the existing credit facility.
Caution Regarding Forward-looking Statements
This press release contains forward-looking information within the meaning of applicable Canadian securities legislation, including relating to the timing, completion and consequences of the standby secured funding facility described in this press release and the Company’s expectations regarding its future liquidity. Please refer to Home Capital's 2017 Annual Report, available on Home Capital's website at www.homecapital.com, and on the Canadian Securities Administrators' website at www.sedar.com, for Home Capital's Caution Regarding Forward-looking Statements.
About Home Capital Group Inc.
Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of insured residential mortgage products, consumer lending and credit card services. In addition, Home Trust offers deposits via brokers and financial planners, and through its direct to consumer deposit brand, Oaken Financial. Home Trust also conducts business through its wholly owned subsidiary, Home Bank. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.
Home Capital Group Inc.
Laura Lepore, 416-933-5652
Assistant Vice President, Investor Relations