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Banking, finance, and taxes

Buffett & Berkshire Hathaway Retiring Debt, With Debt (BRK-A, BRK-B)

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By Douglas A. McIntyre Updated Published
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Warren Buffett is raising capital.  Berkshire Hathaway Inc. (NYSE: BRK-A) has just filed with the SEC to raise up to $1 billion via a sale of debt securities.  It is selling its own equivalent of a long-bond: Senior Notes due 2040, up to $750 million.  It is also selling up to $250 million in Floating Rate Senior Notes due 2012.   The notes will be senior unsecured indebtedness of Berkshire Hathaway Finance Corporation and will rank equally with all its other existing and future senior unsecured debt.

The guarantee will be a senior unsecured obligation of Berkshire Hathaway Inc. and will rank equally with all of its other existing and future senior unsecured obligations.

The sole book-running manager is listed as J.P. Morgan, while the joint lead manager is Wells Fargo Securities.  As far as the use of funds, this is for debt retirement: We intend to use all of net proceeds that we receive from the sale of the notes to satisfy and retire BHFC’s existing 4.125% Senior Notes due 2010.

This sounds almost like a big event on the surface.  Unfortunately it is not.  This is debt used to redeem debt even considering that Buffett and friends are selling 30-year debt.  But these seem to be redeemable, meaning they are callable at Berkshire Hathaway’s option.

A billion dollars for Warren Buffett and Berkshire Hathaway just isn’t what it used to be.

JON C. OGG
January 6, 2010

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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