Home Capital Shareholders Reject Buffett's Expanded Stake

Home Capital Shareholders Reject Buffett's Expanded Stakeā€

Home Capital's (TO:) shareholders on Tuesday rejected a proposal for Warren Buffett's Berkshire Hathaway to raise its stake in the company, voting against the board's recommendation in a rare defeat for the US billionaire. It added that with a 38% stake, Berkshire Hathaway would have significant influence over the company. The second tranche required approval from a majority of voting shareholders, excluding Berkshire.

Home Capital's executives have emphasized the importance of having an investor of Buffett's credibility backing the company.

The rejection follows a recommendation by Institutional Shareholder Services that shareholders vote against the proposal.

However, ISS said much of the benefit was already in place after the initial transaction and questioned the benefits for Home Capital's shareholders of Buffett increasing his stake. As Eprile read the vote tally, a shareholder shouted "Wow, great!" amid a smattering of applause in the room with three dozen people.

The investor adviser argued that the allocation would offer "nominal" strategic benefits already established under Berkshire's first investment. "To provide so many shares at such a deep discount dilutes the company- it just didn't seem worth it".

The deal was struck at the height of Home Capital's liquidity crisis earlier this year; but it's been a source of conflict with proxy advisors split on the plan and some top shareholders speaking out against it ahead of the meeting.

Nurse and private investor Mathias Uy, 30, changed his vote just before the meeting. It would have been the second tranche of Buffett's investment. Home Capital reached a settlement with the commission in June and accepted responsibility for misleading investors. "If shareholders vote it down we'll be fine", Buffett said.

Buffett, for his part, told Bloomberg TV in August that he knew it would be subject to a vote of shareholders and that "if shareholders vote it, we buy it, and if the shareholders don't vote it we don't buy it".

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