General Re Corporation to Sell Controlling Interest in Gen Re Securities.Business Editors STAMFORD, Conn.--(BUSINESS WIRE)--Feb. 4, 2001 General Re Corporation, a wholly-owned subsidiary of Berkshire Hathaway Berkshire Hathaway (NYSE: BRKA, NYSE: BRKB) is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Inc., announced today that it has entered into an agreement, in principle, with Mr. Peter Hancock and Mr. Roberto Mendoza, and their partners, to sell a controlling stake in Gen Re Securities Holdings. General Re Corporation will retain a substantial minority common equity position after the transaction closes, and will provide credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing to the firm as part of a consortium of financial guarantors. The venture will seek to develop a new type of financial services firm that will provide advice to corporate, individual and governmental clients and implement solutions to problems through retaining or intermediating complex financial risks. Mark Byrne, Chairman and Chief Executive Officer of Gen Re Securities, said "This is a great step for Gen Re Securities. Roberto and Peter's plans for the firm are enormously exciting to us. The resources that Roberto and Peter bring to us will allow Gen Re Securities to broaden its business plan and reach its targets sooner. We are fortunate to have these terrific new partners." Ronald E. Ferguson, Chairman and Chief Executive Officer of General Re Corporation, said, "We are very pleased to be partners with Peter and Roberto. The strengths they add to Gen Re Securities will help the firm reach its ambitions in the global capital markets." Warren E. Buffet, Chairman and Chief Executive Officer of Berkshire Hathaway Inc., said, "Roberto Mendoza and Peter Hancock are the kind of people I want to be in business with. I have great confidence in the business plan and prospects of Gen Re Securities, and I look forward to being a permanent shareholder." The transaction, which is expected to close in the third quarter of 2001, will not affect the guarantee of General Re Corporation on all derivatives transactions executed and conducted under the existing ISDA ISDA See: International Swap Dealers Association Master Agreements. The long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of General Re Corporation is rated AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. by Standard & Poor's Corporation and Aa1 by Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. . General Re Corporation, a subsidiary of Berkshire Hathaway Inc., is a holding company for global reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. and related risk management operations. It owns General Reinsurance Corporation and holds a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in Cologne Re. Both companies operate under the trade name GeneralCologne Re. General Re operates as a dealer in the securities and derivatives markets through Gen Re Securities Holdings Limited, a holding company for several financial firms, including General Re Financial Products Corporation and General Re Financial Securities Limited. |
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