Home Capital Said in Talks With Banks to Replace Pension Loan
The Toronto-based lender is speaking with Canadian banks including Royal Bank of Canada, Bank of Montreal, and Toronto-Dominion Bank, and international lenders Credit Suisse Group AG and Goldman Sachs Group Inc., the people said, declining to be identified as the talks are private.
Home Capital’s executives said on a quarterly conference call last month that replacing the credit line was a priority for the company, which is facing a run on deposits following allegations it misled investors about mortgage fraud.
The company said it would be looking to replace the one-year credit line from Healthcare of Ontario Pension Plan, which cost the company about 22 percent a year on the first half of the loan.
Representatives for all the banks and Home Capital declined to comment or couldn’t immediately be reached.
Reuters earlier reported that the company is seeking an interest rate of 2 percent to 3 percent above the cost of funds, though it’s not clear if they can get those terms.
Home Capital paired losses and was up 7 percent to C$12.10 at 2 p.m. in Toronto trading, after earlier falling as much as 10 percent. The stock has more than doubled from its lows a month ago, though is still down 62 percent this year.