The new loan results in a lower aggregate cost than the existing facility, Home Capital’s chief financial officer Brad Kotush said in a statement. “We have significantly reduced our reliance on demand deposits for funding.”
The terms of the new line of credit includes a 0.75-per-cent upfront commitment fee, 0.6-per-cent annual standby charge on any unused portion and an interest rate on the drawn portion equal to three-month the Canadian Deposit Offered Rate (CDOR) plus 150 basis points. Three-month CDOR stands at about 1.75 per cent, so the interest rate would be about 3.25 per cent.
The previous credit agreement from Berkshire carried about a 9-per-cent interest rate on outstanding balances and 1 per cent on the undrawn funds.