TORONTO, April 26, 2017 /CNW/ - Home Capital Group Inc.
("The Company" TSX: HCG) announces that its subsidiary, Home Trust,
has reached a non-binding agreement in principle with a major
institutional investor for a credit line in the amount of
$2 billion. It is expected that a
firm commitment will be agreed to later today.
The $2 billion loan facility would
be secured against a portfolio of mortgages originated by Home
Trust.
Home Trust would be required to pay a non-refundable commitment
fee of $100 million and make an
initial draw of $1 billion. The
interest rate on outstanding balances would be 10 per cent, and the
standby fee on undrawn funds would be 2.5 per cent. The facility
would mature in 364 days.
The facility, combined with Home Trust's current available
liquidity, would provide Home Trust access to more than
$3.5 billion in total funding, more
than twice the amount of outstanding High Interest Savings Account
(HISA) balances.
Home Trust had liquid assets of $1.5
billion as at April 24, 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.
HISA balances have fallen by $591
million in the period from March 28
to April 24. The total HISA balance stood at approximately
$1.4 billion as at April 24. The Company anticipates that further
declines will occur, and that the credit line would also mitigate
the impact of those.
Home Trust's Guaranteed Investment Certificate (GIC) deposits
remained essentially unchanged over that time. Total GICs,
including both Oaken and broker GICs, stood at $13.01 billion as at April
24, compared to $13.06 billion
as at March 28.
Home Capital also advises that the terms of the proposed
agreement would have a material impact on earnings, and would 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.