Is Lending Money to Buffett a Privilege Worth Paying For?
By FLOYD NORRIS The New York Times May 22, 2002 WARREN E. BUFFETT wants to borrow up to $287.5 million, and he thinks he should pay a negative interest rate on the money. That is, he thinks the lenders should pay him money. And what do the lenders get in return, aside from negative cash flow? They receive the right to buy shares in Berkshire Hathaway at a premium over the current market price. That right will be good for five years, by which time, the lenders will hope, Berkshire stock will have risen enough to make the investment a good one The offering is a private placement that was unveiled to institutional investors yesterday afternoon by Goldman, Sachs, which designed the structure. In its announcement, Berkshire Hathaway said it was “the first-ever negative-coupon security.” It is being offered in a private placement only to institutional buyers. The exact pricing is expected to be disclosed today. Under the proposal made to investors, Berkshire would pay perhaps 3 percent a yea
