We havent had any purchase news from Buffett for a while but we got some recently with Buffett Sinking in money to Harley Davidson to the tune of 300 mil in USD bond purchase that pays 15% interest. Holy Cow, wish i can have that interest rate!(although i know our singapore REITS pays that)
New York: Once again coming to the rescue of American corporate, billionaire investor Warren Buffett will be buying USD 300 million worth Harley-Davidson bonds, which will help the bike manufacturer improve its cash position.
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Harley-Davidson, well known for high-end motorbikes has been reeling under economic turmoil, which has even forced the entity trim its workforce by 1,100.Of the total USD 600 million-worth newly issued bonds, Buffett-led Berkshire Hathaway would buy bonds to the tune of USD300 million.On Tuesday, Harley-Davidson in a statement said it has priced an offering of USD 600 million of senior unsecured notes as part of its plan “to fund the ongoing motorcycle lending activities of its wholly-owned finance company, Harley-Davidson Financial Services”.
According to the statement, the company’s largest shareholder — Davis Selected Advisers, LP and Buffett-led Berkshire Hathaway would be purchasing “equal portions of the aggregate principal amount of the notes”.
In return for buying bonds, Harley-Davidson would be paying an interest of 15 per cent on the total investment to Buffett and Davis Selected Advisers.
“The notes will be due in 2014 and will bear interest at a rate of 15 per cent per annum,” it said.
In 2008, Buffett had put his money into investment banking major Goldman Sachs and industrial conglomerate General Electric, at a time when both entities hit by the credit crunch.
The billionaire investor put in USD five billion and USD three billion in Goldman Sachs and GE, respectively.
Commenting on the issue of new bonds, Harley-Davidson’s chief financial officer Tom Bergmann, said, “this offering represents an important next step in executing our stated strategy for funding the lending activities of HDFS”.
Bergmann is also the interim president of HDFS.
For the December quarter, the bike manufacturer had reported a 58 per cent decline in profits at 77.8 million dollars as compared to the year-ago period.
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