Oct 1 Warren Buffett's Berkshire Hathaway Inc
will receive Goldman Sachs Inc stock worth
nearly $2.15 billion on Tuesday through warrants acquired as
part of a deal originally signed during the depths of the 2008
Buffett received the warrants five years ago when his
investment in Goldman was seen as a vote of confidence in the
bank, which was reeling from turmoil in the credit market.
Under that deal, Berkshire had the right to buy about 43.5
million Goldman shares - or a roughly 9 percent stake then - at
an exercise price of $115 per share, for $5 billion in total.
Goldman announced an amended deal in March that would give
Berkshire a much smaller stake but would not require it to
commit any capital to exercise the warrants.
Berkshire will convert the warrants into shares equal in
value to the difference between the warrants' exercise price and
the average closing price for Goldman shares in the 10 trading
days up to Oct. 1.
Based on the last 10-day share price average of $164.38,
Berkshire would be entitled to about 13.1 million Goldman
shares, making it the sixth largest external investor in the
bank, according to Thomson Reuters data.
Buffett's investment in 2008 cost Goldman dearly. In
addition to the warrants, the bank had to give Berkshire
preferred stock that paid dividends of $500 million a year, or
about $15 a second. Goldman repurchased those shares from
Buffett at a premium in March 2011.