West Face to sue Home Capital Group for $70M

Home Capital Group Inc. (TSX: HCG) disclosed today that it has received a draft statement of claim – not yet filed in court — prepared on behalf of West Face Long Term Opportunities Global Master LP, a Caymans Island limited partnership which opted out of a global settlement of the securities class action earlier this year with Home Capital.

Home Capital Group said the potential claim as damages, based on allegations of misrepresentation, would be $70 million.

Home Capital Group believes it has valid defences and, if West Face commences the claim, it intends to fully defend its conduct, as well as to investigate the conduct of the various short sellers and the propriety of their actions whether acting alone or in concert with others.

West Face built a significant short position in Home Capital in the spring and summer of 2013. It then reversed its investment strategy, covering its short position between the fall of 2013 and the spring of 2015.

Columbia Insurance Company, a wholly owned subsidiary of Berkshire Hathaway Inc. (NYSE: BRK.A), currently owns 16,044,580 Home Capital common shares, representing approximately 19.99% of the issued and outstanding common shares. Berkshire’s proposed additional investment in Home Capital was voted down by 88.79% of the shares voted at a Special Meeting on September 12, 2017.

Ted Liu

Ted Liu, M.Sc. (Mining), MBA (Finance), is the Editor of Private Capital Journal and CanadaMetals.ca, and former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA). Ted was the architect of CVCA infobase, and is the architect of CPE Media's Financings.ca, the most sophisticated and advanced all private capital and public market financing database.