TORONTO, June 5, 2014 /CNW/ - Home Capital Group Inc.
("Home Capital") (TSX:HCG) announced today that its wholly owned
subsidiary, Home Trust Company ("Home Trust") has agreed with its
customer National Energy Corporation ("National") on the
termination and repayment of financing arrangements currently
totaling approximately $236 million
related to National's sales and rentals of water heaters.
Earlier today, National's parent company, Just Energy Group,
Inc., announced that it has entered into an agreement to sell the
shares of National to Reliance Comfort Limited Partnership (the
"Sale Transaction"). In connection with the Sale Transaction,
National and Home Trust will terminate their financing
arrangements.
The termination and repayment will be effective on closing of
the Sale Transaction. The Sale Transaction is subject to, among
other things, the approval of the federal Competition Bureau. The
agreement between National and Home Trust includes compensation to
Home Trust for the early termination of the water heater financing
arrangements. Home Trust's compensation is expected to be in the
range of $32 million to $38 million
(before tax). This will compensate Home Trust for interest that
would have been received over the original contractual terms of the
financing arrangements, which extended over a range of periods
ending in 2023. Home Trust will continue to provide financing to
National until closing of the Sale Transaction.
At closing of the Sale Transaction, National will repay to Home
Trust the outstanding financing, along with the associated early
termination compensation, which will be recorded in the
consolidated income of Home Capital. The amount of the early
termination compensation will depend on the amounts and remaining
contractual terms of the financing arrangements at closing of the
Sale Transaction. Following that date, no further interest
income from National will be recorded by Home Trust.
About Home Capital and Home Trust
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 deposits, residential and non-residential
mortgage lending, securitization of insured residential first
mortgage products, consumer lending and credit card services.
Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British
Columbia, Nova Scotia,
Quebec and Manitoba.
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 2013 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.
SOURCE Home Capital Group Inc.