TORONTO, April 27, 2017 /CNW/ - Home Capital Group Inc. ("The Company" TSX: HCG) today announced that its subsidiary, Home Trust, has secured a firm commitment for a $2 billion credit line from a major Canadian institutional investor.
The Company also announced it has retained RBC Capital Markets and BMO Capital Markets to advise on further financing and strategic options.
The $2 billion loan facility is secured against a portfolio of mortgages originated by Home Trust.
Home Trust has agreed to paying a non-refundable commitment fee of $100 million and will make an initial draw of $1 billion. The interest rate on outstanding balances is 10 per cent, and the standby fee on undrawn funds is 2.5 per cent. The facility matures in 364 days, at the option of Home Trust.
The facility, combined with Home Trust's current available liquidity, provides the Company with access to approximately $3.5 billion in total funding, exceeding the amount of outstanding High Interest Savings Account (HISA) balances.
Home Trust had liquid assets of $1.3 billion as at April 25, plus an additional portfolio of available for sale securities totaling approximately $200 million.
Access to these funds is intended to mitigate the impact of a decline in Home Trust's HISA deposit balances that has occurred over the past four weeks and that has accelerated since April 20. The Company will work closely with the lender to have the funds available as soon as possible.
Home Trust expects to have a HISA balance of approximately $814 million on Thursday, April 27, after settlement of Wednesday's transactions.
Total Guaranteed Investment Certificate deposits, including both Oaken and broker GICs, stood at $12.98 billion as at April 25.
Home Capital also advises that the terms of the agreement will have a material impact on earnings, and will leave the Company unable to meet previously announced financial targets.
Home Trust's GICs and HISA deposits are eligible for Canada Deposit Insurance Corp. coverage.
Caution Regarding Forward-looking Statements
This press release contains forward-looking information within the meaning of applicable Canadian securities legislation. Please refer to the Home Capital's 2016 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.
SOURCE Home Capital Group Inc.
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