Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) was one of the investors in Harley-Davidson Inc’s (NYSE: HOG) offering of $600 million of senior unsecured notes. The company is raising funds for the lending activities of Harley-Davidson Financial Services.
Davis Selected Advisers, L.P. has been a long-time investor inHarley-Davidson and is the largest holder of Harley-Davidson’s commonstock. Davis and Berkshire Hathaway each committed to purchase equal amounts of the notes. After looking throughBuffett’s holdings, it seems that this is a new position for Berkshire. The notes are five year notes due in 2014 with 15% annualrates.
Harley-Davidson unveiled a three-part strategy in January to addressthe current economic environment with a focus on stimulating consumerdemand by investing in the brand, bringing down its cost structure, andsecuring additional funding for its financial services unit.
This offering was arranged by Morgan Stanley, and Citigroup, withDeutsche Bank, JPMorgan and Morgan Stanley as lead underwriters. It is under an existing shelf registration forpublic offerings of securities, including debt.
Based on the "who" is involved here, it is no shock thatHarley-Davidson shares are up. But they are up 8% at $12.80 and havealready seen a full day’s worth of trading volume with more than 5.5million shares as of 10:39 AM EST.
Jon C. Ogg
February 3, 2009