From The Rational Walk:
According to a report published this morning, J.P. Morgan analysts believe that Swiss Re will be in a position to pay back its CHF 3.6 billion loan from Berkshire Hathaway as soon as June 2010. We originally discussed the terms of Berkshire’s investment in Swiss Re last March shortly after the transaction was finalized.
To briefly summarize, the terms of the funding included a 12% fixed interest rate and gave Swiss Re the right to defer interest payments for an additional fee of 15% per annum on the deferred interest. Berkshire has the right to convert the loan into Swiss Re common shares starting three years after the issue date at CHF 25 per share which is far below the current quotation.
In exchange for repaying the security early and eliminating Berkshire’s right to convert into common shares, Swiss Re must pay a 40% premium over face value if the repurchase occurs prior to the second anniversary of the transaction.
Berkshire’s latest quarterly report contains the following summary...MORE
