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Berkadia

Berkadia Closed $221 Million in Financing for Brookdale Senior Living

(BRK.A), (BRK.B)

Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has announced it had closed $221 million in financing for Brookdale Senior Living Inc. on July 11.

The Fannie Mae Credit Facility is for 10 years and will be used to refinance two existing Brookdale loan portfolios. It has a a 75% loan-to-value ratio and a 30-year amortization schedule.

“The Fannie Mae Credit Facility product provided Brookdale flexibility to meet their financing needs. The Brookdale team, the Fannie Mae team and the Berkadia underwriting team worked together to make this transaction a seamless process,” said Berkadia’s Managing Director Heidi Brunet. She originated the transaction with Christopher Fenton.

Brookdale Senior Living is the leading seniors housing operator in the country and operates 1,036 communities with the ability to serve approximately 102,000 residents as of June 30, 2017.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Insurance

MedPro Group Expands International Facility Coverage Capabilities for United States Domiciled Risks through Reinsurance Program Participation

(BRK.A), (BRK.B)

Berkshire Hathaway’s MedPro Group will participate in the US Jurisdiction medical professional liability facility of The Medical Professional Liability Company Ltd.

MedPro has added its support to that of existing subscribing Syndicate, Pembroke Managing Agency Limited Syndicate 4000. Pembroke Managing Agency Limited is a wholly-owned subsidiary of Ironshore.

Launched in January 2011, the facility offers cover on Lloyd’s paper to US institutions providing clinical services outside of the United States. The cover is enhanced by a unique offering of claims handling solutions, clinical governance review and a 24-hour legal helpline delivered by The MPLC.

MedPro and The MPLC believe the combination of their respective domestic and international expertise will provide their clients an unparalleled partner for underwriting risks that extend beyond U.S. domestic borders.

Maximum limits available for this facility are USD15M for any one claim and USD30M in the annual aggregate.

John Young, Managing Director of The MPLC said: “We are delighted to have MedPro’s and Pembroke’s support which will strengthen our program, especially for MedPro’s producing brokers and healthcare clients. The offering combines MPLC’s wide international experience with MedPro’s financial strength and experience as well as the strength and expertise of the Pembroke Syndicate at Lloyd’s of London.”

Discussing MedPro’s motivation behind the partnership, Craig Rowland, Business Development Lead for MedPro’s International Division said: “Through this facility, we are very pleased to be able to further support our domestic institutional clients, who daily trust us to protect their assets and reputations, by now being able to cover their international risks. It is always our deepest desire to continually meet the needs of our clients and serve them as their risks grow and become more complex.”

Tim Glover, Chief Underwriting Officer for Pembroke Managing Agency said: “We look forward to expanding our successful partnership with MedPro and The MPLC. Our collective breadth of experience and distribution will better serve our broker and client needs.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Kraft Heinz Minority Stock Positions Stock Portfolio

Berkshire to Benefit from Increased Dividend at Kraft Heinz

(BRK.A), (BRK.B)

As the largest shareholder in Kraft Heinz, the fifth-largest food and beverage company in the world, Berkshire Hathaway will benefit from the company’s recently announced increase in its quarterly dividend.

On August 3, Kraft Heinz announced that its Board of Directors approved an increase in the company’s quarterly dividend to $0.625 per share of common stock, or $2.50 per share of common stock on an annual basis.

This represents an increase of approximately 4.2 percent versus the prior quarterly dividend rate of $0.60 per share, or $2.40 on an annual basis.

The dividend declared is payable on September 15, 2017 to shareholders of record as of August 18, 2017.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Lubrizol

Lubrizol’s LifeSciences Investing $10 Million at Wisconsin Manufacturing Site

(BRK.A), (BRK.B)

The Lubrizol Corporation’s LifeSciences business is investing $10 million for a significant capacity expansion at its silicone contract manufacturing site in Franklin, Wisconsin.

This investment strengthens the company’s silicone business by adding 71,000 square feet of space that complements the existing 126,000 square foot operation.

Previously, in 2010, Vesta more than doubled its footprint at this location; the current expansion supports LifeSciences’ long-term growth strategy to provide high-quality manufacturing for silicone implants and finished medical devices.

“When customers partner with Lubrizol LifeSciences, they benefit from working with us at every stage in their development process,” states Uwe Winzen, general manager, Lubrizol LifeSciences. “With a long history of polymer expertise combined with recent investments, Lubrizol LifeSciences is positioned to offer full-service development for the next generation of medical devices, as well as long-term implantable and drug-eluting device innovations.”

The expansion adds 71,000 square feet of new space featuring product development, cellular manufacturing, and high-efficiency production lines, as well as separate Class 7 & 8 clean room space for the production of implants and drug-eluting devices.

The expansion allows LifeSciences to capitalize on the strong local labor pool and technical expertise offered in the Wisconsin area.

“This new space covers immediate short-term needs, but also provides room for growth in the future. Customers can feel comfortable that we are able to handle both their current projects, as well as a significant increase in their future business efforts,” states Mark Stuart, general manager, Vesta. “Companies looking for a world-class, efficient contract manufacturing partner can choose us knowing that we are a sustainable partner for their long term growth.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
GEICO Insurance

GEICO Celebrates 4 Million Policies Milestone

(BRK.A), (BRK.B)

GEICO Insurance is celebrating reaching the four million policies milestone.

“Four million policies in force is truly a remarkable achievement in the history of the GEICO Insurance Agency,” says John Zinno, president of the GEICO Insurance Agency. “This milestone speaks volumes about our growth but more importantly, it exemplifies the hard work and dedication of our associates.”

Improved sales, service and customer retention along with a commitment to providing great products and services have been a catalyst for the GEICO Insurance Agency’s growth, and it also ties back into the company’s 20-year-old motto that emphasizes the importance of providing exceptional customer service.

“’Never say no to a customer’ is an attitude that is central to the way we interact with customers,” says Zinno. “It’s imperative that we always go the extra mile to make sure our customers have a remarkable experience every step of the way.”

Headquartered in Fredericksburg, Va., with offices in Buffalo, N.Y., and Virginia Beach, Va., the GEICO Insurance Agency is a subsidiary of the GEICO Corporation. The company offers multiple lines of insurance products, including homeowners, renters, condo, boat and umbrella insurance. Associates in the company’s three locations marked the achievement with a celebration.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Acquisitions Berkshire Hathaway Energy Commentary Warren Buffett

Commentary: It’s All in the Cards Monday for Berkshire’s Oncor Bid

(BRK.A), (BRK.B)

Monday’s hearing before Judge Christopher Sontchi in U.S. Bankruptcy Court in Delaware, could decide the fate of Berkshire Hathaway’s $9 billion bid for Oncor Electric Delivery. It’s the latest round of a high stakes poker game that has seen all the players trying to strengthen their hands.

For Berkshire, the key to whether it wins the right to acquire the utility may not just be whether Warren Buffett can prevail over Paul Singer’s Elliot Management, but also the judge’s response to a third bid offering $9.45 billion, which is said to be coming from Sempra Energy of San Diego.

Paul Singer and Elliot Management’s strong hand comes from its status as the largest owner of every class of impaired debt. The hedge fund recently purchased $60 million of leveraged buyout notes to cement that status. And, while Singer has talked of putting together a bid to top Buffett’s offer, he could just as well side with Sempra’s offer.

Another Player Comes to the Table

Sempra Energy could have a strong hand of its own, as it is a credible bidder. Sempra was created in 1998 by a merger of parent companies of two long-established, and highly respected, investor-owned utilities — Los Angeles-based Pacific Enterprises, the parent company of Southern California Gas Co., and Enova Corporation, the parent company of San Diego Gas & Electric by a merger of parent companies of two long-established, and highly respected, investor-owned utilities — Los Angeles-based Pacific Enterprises, the parent company of Southern California Gas Co., and Enova Corporation, the parent company of San Diego Gas & Electric. Today it has 16,000 employees and serves 32 million customers worldwide.

Is the Key the Support of the Stakeholders?

Berkshire’s aces come from an approach that has focused on lining up support from the stakeholders that receive power from Oncor. Five key Texas stakeholder groups have all endorsed Berkshire’s bid.

On Friday, Berkshire Hathaway Energy announced that the Staff of the Public Utility Commission of Texas, Office of Public Utility Counsel, Steering Committee of Cities Served by Oncor, the Texas Industrial Energy Consumers and the IBEW Local 69 have entered into a settlement agreement with Berkshire Hathaway Energy.

The agreement resolved all issues in Berkshire Hathaway Energy’s acquisition of Oncor.

By entering into the settlement, the parties agreed that the acquisition is in the public interest, meets the statutory standards and will bring substantial benefits to Oncor and its customers. The parties to the agreement ask the Public Utility Commission of Texas to approve the acquisition consistent with the enhanced commitments in the agreement.

Will Berkshire Raise its Offer?

Both Greg Abel, Berkshire Hathaway Energy chairman and CEO, and Warren Buffett, have stated the company will stand firm on its $9 billion offer to acquire 80% of Oncor and will not be increasing its offer. Berkshire will collect a $270 termination fee if its offer is rejected.

Berkshire is hoping that in the end Judge Sontchi is persuaded by the support of 12 key stakeholder groups across Texas for Berkshire’s bid.

“The strong coalition of stakeholders consistently express the appropriate concerns and necessary protections for Oncor and its customers,” said Abel. “We stand ready to deliver on and exceed the regulatory commitments

In any case, Monday is looking like the decisive day in the fate of Oncor. Like a poker game of Texas Hold ‘Em, all the cards will be on the table.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Energy

Key Texas Regulators and Union Rule Berkshire’s Oncor Bid is in the Public Interest

(BRK.A), (BRK.B)

In advance of Monday’s hearing in U.S. Bankruptcy Court in Delaware, Berkshire Hathaway Energy has announced that the Staff of the Public Utility Commission of Texas, Office of Public Utility Counsel, Steering Committee of Cities Served by Oncor, the Texas Industrial Energy Consumers and the IBEW Local 69 have entered into a settlement agreement with Berkshire Hathaway Energy.

The agreement resolves all issues in Berkshire Hathaway Energy’s acquisition of Oncor.

“We are excited by this unprecedented agreement with these stakeholders, as they have committed their full support to our acquisition of Oncor. This show of support is extraordinary,” said Greg Abel, Berkshire Hathaway Energy chairman, president and CEO. “Our financial strength and commitment to invest in the business will serve Oncor and its customers well and we will exceed their expectations. Our deal offers a great outcome for Texas.”

By entering into the settlement, the parties have agreed that the acquisition is in the public interest, meets the statutory standards and will bring substantial benefits to Oncor and its customers. The parties to the agreement ask the Public Utility Commission of Texas to approve the acquisition consistent with the enhanced commitments in the agreement.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Energy

Berkshire Scraps Proposed California Geothermal Plant

(BRK.A), (BRK.B)

Plans have been scrapped for a major geothermal power plant that was expected to be built by Berkshire Hathaway Energy.

The Black Rock Geothermal Power Project was scheduled to be built on the shores of the Salton Sea in California, but BHE subsidiary CalEnergy has requested that California Energy Commission terminate the license for the project.

The much-delayed project was first approved fourteen years ago, and received extensions of the construction start deadline in 2007, 2011 and 2014.

The Black Rock plant would have generated 159-megawatts of electricity, but high-startup costs and environmental concerns have limited the development of geothermal energy.

Among the concerns are that geothermal power plants can in some situations cause earthquakes.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Energy

Berkshire Refuses to Get Into a Bidding War Over Oncor

(BRK.A), (BRK.B)

Will Berkshire raise their $9 billion bid to acquire Oncor Electric Delivery Company if Elliot Management comes in with a higher offer? The answer is no.

Greg Abel, Berkshire Hathaway Energy chairman and CEO, and Warren Buffett, chairman and CEO of Berkshire Hathaway stated the company will stand firm on its $9 billion offer to acquire 80% of Oncor and will not be increasing its offer.

“We appreciate the continued opportunity to collaborate with many stakeholder groups in Texas and thank them for their outstanding support, which sets our offer apart from any other bid,” Abel said. “We’re committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state.”

Berkshire Hathaway Energy’s bid for Oncor includes 47 regulatory commitments that have the support of 12 key stakeholder groups across Texas. “The strong coalition of stakeholders consistently express the appropriate concerns and necessary protections for Oncor and its customers,” said Abel. “We stand ready to deliver on and exceed the regulatory commitments.”

“Oncor is a strong company with values, management and employees that will fit well with Berkshire Hathaway,” said Buffett. “We already have a number of excellent companies operating in Texas. It is a great place to do business, and we look forward to continuing to invest in the state.”

With new stakeholders signing on to support Berkshire’s bid every day, there is good reason to think that will win its Texas-sized prize. However, if the Oncor deal falls through, Berkshire will receive a $270 million termination fee.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Fruit of the Loom

Fruit of the Loom Focuses on Sustainability

(BRK.A), (BRK.B)

Berkshire Hathaway’s Fruit of the Loom, Inc., has recently joined The Sustainability Consortium (TSC) as part of its ongoing commitment to corporate social and environmental responsibility.

TSC is a global, non-profit organization working to transform the consumer goods industry so that mainstream consumer goods bought each day, like Fruit of the Loom products, are more sustainable.

“Operating in a sustainable manner is extremely important to all of us at Fruit of the Loom,” said Tony Pelaski, Fruit of the Loom executive vice president and chief operating officer. “As a global organization, we have an obligation to constantly evaluate and improve our sustainability practices. Joining TSC will allow us to evolve and expand our current processes to remain a sustainable organization and leader in the apparel category.

Euan Murray, TSC chief executive states, “We are thrilled to welcome Fruit of the Loom to our very active textiles sector, where they will join other TSC members to improve the environmental, social, and economic performance of the textile value chain. Fruit of the Loom’s membership with TSC and leadership in the apparel industry will us help create more sustainable products for a more sustainable planet.”

As part of The Sustainability Consortium, Fruit of the Loom will have access to one of the world’s largest research databases, which translates sustainability science and data into business tools that can be used throughout a product’s supply chain and lifecycle. Other members of TSC include manufacturers, suppliers, services providers, NGOs, civil society organizations, governmental agencies and academics.

“Fruit of the Loom is committed to conducting business in a socially responsible fashion,” said Pelaski. “The tools available to TSC members will be an invaluable asset as we work toward making products that are not only better for consumers, but also better for the environment,” said Pelaski. “We are proud to be a member of TSC and look forward to learning more from this valuable partnership.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.