DBRS Limited (DBRS Morningstar) notes that Home Capital Group Inc.'s (HCG or the Group) receipt of an unsolicited nonbinding expression of interest has no impact on HCG's ratings, including its Long-Term Issuer Rating of BBB (low) with a Positive trend.

The Group announced that it received an unsolicited, nonbinding, and conditional expression of interest from an arm's-length third party (the Third Party), in which the Third Party expressed an interest in acquiring all of the Group's issued and outstanding common shares. The Group received the nonbinding expression of interest after it commenced the recently announced substantial issuer bid (the Issuer Bid) to repurchase for cancellation up to $115 million of its common shares from shareholders for cash. The consideration contemplated in the nonbinding expression of interest was all cash and exceeded the maximum purchase per common share ($28.60) offered to the Group's shareholders pursuant to the Issuer Bid.

HCG's board of directors, in consultation with legal and financial advisors, has reviewed and determined that the proposal is not in the best interests of the Group or its shareholders. The Third Party, in conjunction with another party, previously made an unsolicited nonbinding proposal to acquire all of the Group's issued and outstanding common shares, which was subsequently terminated.

Recent performance has been good, with the Group reporting Q2 2022 net income of $41.3 million. Despite rising interest rates and a slowing housing market, originations reached a record $3.0 billion in the second quarter. Please see 'Home Capital Group Reports Lower Q2 2022 Earnings Due to Margin Compression and Provisions,' published on August 5, 2022, for more information.

Notes:

All figures are in Canadian dollars unless otherwise noted.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.

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