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HomeTrust On Sale (Oaken Financial)
May 5, 2017
5:18 pm
Jon
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I just have a feeling that this is a test run for Russia to attack our financial system, consider this news is broke in zerohedge, a Russian propaganda site.

Lesson learn: a bank, even if it operate normally, cannot survive a bank run due to the nature of fractional reserve system.

May 5, 2017
7:56 pm
Loonie
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I feel sorry for the employees at Oaken, whom I have found to be generally quite competent. I'll bet they're sending out resumes as fast as they can - which leads to even more instability and headaches at HCG. Also, they are shareholders.

May 5, 2017
8:01 pm
Loonie
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Would you care to tell us where you got your info about the Russians in zerohedge, Jon? I am not familiar with this.

May 5, 2017
9:14 pm
Loonie
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New CEO appointed at HCG, with experience in mergers and acquisitions at RBC.
http://business.financialpost......e-election

Why are they hanging on to Morton, I wonder, even if in another role?

May 5, 2017
9:26 pm
AltaRed
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Delaying the hearing even to June 2nd is injurious to HCG's health. OSC has had lots of time to get its case together. Squeezing the aorta in what appears to be a non-sensitive cavalier way is not good PR for OSC.

Everyone wants/needs to know.

May 5, 2017
9:43 pm
Loonie
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I agree with AltaRed.
OSC is supposed to act in the public interest. Delaying tactics are not in the public interest.

May 5, 2017
9:48 pm
Jon
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Loonie said
Would you care to tell us where you got your info about the Russians in zerohedge, Jon? I am not familiar with this.  

From Bloomberg, that being said, this is the only credible sources I can find and it is just base on a claim of an individual that use to work there.

May 5, 2017
11:16 pm
NorthernRaven
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Loonie said
New CEO appointed at HCG, with experience in mergers and acquisitions at RBC.
http://business.financialpost......e-election

Alan Hibben has been appointed to the board, not as CEO (acting CEO is board member Bonita J. Then).

On the OSC hearings timing, the lawyers for the Home respondents are actually the ones that are suggesting that an "expedited" timeline with a July hearing might be too quick, given the number of documents and witnesses to evaluate.

May 6, 2017
12:31 am
Loonie
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Sorry, I mis-read the news about the appointment as it said he was replacing former CEO Soloway. I was in too much of a hurry.

I don't see, though, that the HCG lawyers argued for a longer timeline. OSC proposed July 14, and they negotiated to June 2.
CBC article said:

"Lawyers for Home Capital Group Inc. appeared before the Ontario Securities Commission in Toronto on Thursday, the first hearing in a proceeding by the provincial securities regulator against the alternative mortgage lender and three of its executives and former executives.

Speaking before OSC commissioner Janet Leiper, OSC senior litigation counsel Jennifer Lynch proposed holding a hearing on the merits on July 14, 2017. Lynch said the OSC would deliver its witness list, will-say statements, and expert reports to the respondents by May 24, and called for the two sides to work together to expedite the merits hearing.

The OSC gave notice of its action on April 19. During Thursday's hearing, Lynch said the OSC had delivered "99 per cent" of its disclosure at that time.

'In our opinion, there are few facts in this matter that are in dispute,' said Lynch.

Stikeman Elliott partner Peter Howard, representing Home Capital Group, pushed back against Lynch's proposed date for a merits hearing in July. He suggested that the OSC's timeline was intended for public relations purposes.

'It's disappointing that today's submissions are not aimed at us but I think aimed at another audience,' said Howard, gesturing towards reporters seated in the back of the hearing room.

The two sides ultimately agreed to hold a second hearing on June 2, at 2:00 p.m. ET."

It would be in HCG's interests to get this over with as quickly as possible, to minimize the blood-letting.
Perhaps you read a different news report?

May 6, 2017
2:53 am
NorthernRaven
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FP article:

Lawyers arguing the Ontario Securities Commission’s case against Home Capital Group Inc. pushed to expedite the potentially-lengthy proceedings at an opening hearing Thursday.

However, legal counsel for Home Capital and some of its current and former executives accused of misleading disclosure say the vast number of documents to be reviewed and the number of potential witnesses proposed by the OSC will make speeding up the proceedings difficult.

Jennifer Lynch, a litigator for the securities regulator, proposed commencing a hearing on the merits — in which the facts of the case would be argued in front of a panel of OSC commissioners — on July 14, or sometime in mid-July, which would be a faster than typical timeline.

“We are also prepared to work with the respondents to expedite the process, to simplify the issues and to simplify number of days that are needed for a merits hearing,” she told OSC commissioner Janet Leiper on Thursday.

She added that OSC staff planned to submit certain items including its witness list and expert report by May 24.

“In our opinion, there are few facts in this matter that are in dispute,” Lynch said.

Peter Howard, a lawyer with Stikeman Elliott in Toronto representing Home Capital, said the company was only told recently that the OSC is proposing to call between eight and 10 witnesses, whose names have not yet been revealed.

“Speaking for us all, we welcome the idea to sit down and streamline matters … but there’s a lot to do,” Howard said Thursday.

A typical OSC proceeding can be a multi-year process and can often be delayed by lawyers’ motions and other administrative procedures.

May 6, 2017
5:22 am
Loonie
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Clearly these two reporters heard different things!
The truth may lie in the middle somewhere, but it seems to me that if the OSC lawyer first proposed July 14 and it ended up being 6 weeks earlier (on which both reporters agree), that this push to have it earlier must have come from the HCG side. The FP article suggests that July 14 would have been faster than usual, so perhaps the expedience is related to her putting forward that date. Not clear.

However, the issue is moot if, as the FP article suggests, a timeline of several years is likely. I had wondered about that. I find it hard to imagine that dragging it out is in nobody's interests except lawyers'. Shame on them all, especially if indeed "there are few facts in dispute".

May 6, 2017
6:06 am
NorthernRaven
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No, it's all compatible. The first story said the Stikeman lawyer "pushed back against Lynch's proposed date", but didn't provide enough context. What is happening now is only preliminary hearings, to set up the actual "hearing on the merits" (think of it as the "trial") before the OSC commissioners. The OSC proposed expediting this so the merits hearing could start in July. The other lawyers argued that all the preliminaries might take longer than that, and seemed to imply the OSC lawyers were somehow grandstanding in offering the expedited dates.

The June date is just when they've adjourned these preliminaries until, while they work through more of the stuff, and presumably at that time they'll take up the issue of the date of the merits hearing. Think of the OSC staff as the prosecutors, and the OSC commissioners as the judge. Right now its just pretrial motions, before they actually set a trial date.

May 6, 2017
8:40 am
Norman1
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The respondents' lawyers are pushing back because they would like time to review the evidence. Apparently, it is more than the 11-page summary of the allegations that is on the OSC web site.

In Financial Post article Ontario Securities Commission staff push to ‘expedite’ hearings against Home Capital, the lawyer representing former CFO Robert Morton pointed out that the OSC has submitted 22,000 documents to the proceedings. It would take some time to go through those 22,000 documents.

May 6, 2017
7:01 pm
JustMe2016
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In the end, the downfall of HCG will be due to its customers and only indirectly to irregularities that took place at HCG. Today I was thinking about what kind of people buys GICs and chases highest rates and it is mostly people over 50. And those people tend to be extremely risk averse. So as soon as negative news came out there was a run on HCG. And I see absolutely no reason for it to stop. Fear is the greatest of motivators.

So even though HCG doesn't deserve it, its own customers will cause its downfall.

My 2 cents.

May 7, 2017
6:28 pm
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JustMe2016 said

And those people tend to be extremely risk averse.  

No sharp pencil required ... if you're a baby boomer, sitting on a 7-figure nest egg, you're no longer looking for the home run, just looking for capital preservation and a bit of pocket change, on the side.

Don't need companies like HCG P.ing in your rice bowl and ruining your day.

May 8, 2017
6:03 am
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Holy Moly ... the latest from Home Capital -

Home Capital Group Inc. has continued to burn through capital, announcing Monday it has drawn down $1.4-billion of its $2-billion credit line and has suspended its dividend as deposits sink further.

The company also reported that its online retail subsidiary Oaken Financial has savings account deposits of $167-million, down from $222-million as of Friday, April 28.

http://www.theglobeandmail.com.....e34916621/

May 8, 2017
6:13 am
NorthernRaven
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Well, they are actually burning through their credit facility, not capital. It is replacing the fleeing demand deposits. This wouldn't be such an immediate problem if it wasn't for the horrendous cost on that facility, but in any case it gives them a fighting chance of operating until they can either find a buyer, wind down without a fire sale, or (less likely) right the confidence ship enough to stabilize with a smaller balance sheet.

They were running at about $2.5 billion in demand deposits. If they can keep a small sliver of that, plus the $2 billion from Tony Soprano, and conserving cash flow (they've suspended the dividend, and may be writing less business), we'll see what path they go down.

May 8, 2017
6:19 am
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Personally, I think with the admitted draw on 75% of the "Tony Soprano" money, they are in absolutely the weakest of all bargaining positions.

And I'm betting that neither Tony nor the street knew / thought HCG would have that high of burn rate of the credit facility.

May 8, 2017
8:34 am
frank87
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There are plenty of mortgages maturing at HCG in the coming months. If they don't renew on some and let the mortgages go to other lenders, they can pay some or all of the LOC back. Basic deleveraging.

As for the confidence issue, they need to get past this OSC thing ASAP. I imagine that the Board knows this too.

May 8, 2017
9:41 am
Brimleychen
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frank87 said
There are plenty of mortgages maturing at HCG in the coming months. If they don't renew on some and let the mortgages go to other lenders, they can pay some or all of the LOC back. Basic deleveraging.

As for the confidence issue, they need to get past this OSC thing ASAP. I imagine that the Board knows this too.  

That's right! GIC/Deposit/bonds to Home Trust are their liability, and peoples forget that the Mortgage Book are their great assets.

The real test is 325,000,000 CAD bond matured at 24may2017. That's the squeeze that the shorters are betting on.

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