Home Capital adds former banker to board to replace founder

Bloomberg

Home Capital Group Inc. added a former banker to its board of directors in a move the Canadian mortgage lender called “the start of our governance renewal.”
Alan Hibben, a former RBC Capital Markets managing director who specialized in mergers and acquisitions, replaces Home Capital founder Gerald Soloway, who the Ontario Securities Commission named as one of the executives who allegedly misled investors. Hibben joins at a time when Home Capital is evaluating strategic options, including a potential sale.
Shares of Home Capital have fallen 74% since April 19, when the OSC made the allegations public, intensifying a run on deposits at Home Capital and forcing it to take costly rescue loan from the Healthcare of Ontario Pension Plan. In another hurdle, a union representing 12,000 HOOPP workers has sought an explanation for an apparent conflict of interest in the loan.
The move is an “important first step towards restoring market confidence,” DBRS Ltd. said in a statement, two days after downgrading Home Capital’s senior debt to CCC, indicating very highly speculative quality. “While an important appointment, DBRS will look for additional positive changes at the senior management level.”
While the C$2 billion credit facility gives Home Capital enough liquidity to navigate immediate obligations, its ability to maintain operations is uncertain and
regulators are probably actively involved in overseeing the situation, Stephen Boland, an analyst at GMP Securities, said.