Berkshire Hathaway’s investment in Goldman Sachs at the height of the financial crisis represented a major vote of confidence that enabled Goldman to raise additional equity from investors. The September 2008 deal involved $5 billion in Goldman Sachs perpetual preferred stock along with five year warrants to purchase approximately 43.5 million shares of Goldman common stock at $115 per share. The preferred stock carries a dividend rate of 10% and is callable at any time at a 10% premium. Despite the recent drop in Goldman Sachs common stock, Berkshire’s warrants remain in the money. While Goldman could almost surely refinance Berkshire’s $5 billion investment at a lower rate, having Warren Buffett’s endorsement in the current environment may be priceless. Read this article for more details.
Buffett Gives Goldman Sachs Another Vote of Confidence
