SCOTTSDALE, Ariz. - The embattled Finova Group Inc. said Wednesday that it has an agreement with Berkshire Hathaway Inc. and Leucadia National Corp. for a $6 billion loan to Finova Capital Corp., its principal operating subsidiary, to help restructure Finova Capital's outstanding bank and publicly traded debt.
The restructuring will be executed under Chapter 11 proceedings of the United States Bankruptcy Code. Finova said that it expects to file a petition for reorganization under Chapter 11 in the near future.
Last year Finova Group lost over $200 million. In March its longtime CEO, Samuel L. Eichenfield, quit as the company reported an $80 million charge that left its first-quarter earnings shy of projections. In the third quarter the company wrote off $109 million related to investments and posted a $274.1 million loss.
Finova Capital said the loan will be made by Berkadia LLC, which is owned jointly by Berkshire Hathaway and Leucadia. After the restructuring is completed, Berkshire Hathaway and Leucadia will receive common stock representing 51% of Finova's outstanding shares, the company said, while the public will retain its existing shares.