Warren Buffett's Berkshire Hathaway Inc (BRKa.N)(BRKb.N) has converted much of its debt in building products company USG Corp (USG.N) into more than $600 million of common stock in a successful investment made in the wake of the financial crisis.
According to regulatory filings on Tuesday and Thursday, Berkshire acquired 21.39 million USG shares last month by exchanging $243.8 million of convertible notes it held in Chicago-based USG.
That boosted its USG stake to 38.46 million shares, or more than 27 percent, worth $1.09 billion as of Tuesday's close.
The stake makes Berkshire the largest shareholder of USG. It could rise above 30 percent if Berkshire was to swap its remaining $56.2 million of USG notes, a filing shows.
Shares of USG rose 0.7 percent to $28.60 on Thursday.
A USG spokesman declined to comment on Berkshire's stake. He said USG has roughly 139 million shares outstanding on a fully diluted basis following last month's redemption.
Berkshire, based in Omaha, Nebraska, and Canada's Fairfax Financial Holdings Ltd (FFH.TO) in late 2008 acquired $400 million of USG convertible senior notes in a private placement.
With that deal and others in the same time period, Berkshire gained a reputation as a lender of last resort when financial markets come under strain.
The USG notes had a 10 percent interest rate, the same that Berkshire got when it invested $8 billion in Goldman Sachs Group Inc (GS.N) and General Electric Co (GE.N).
Berkshire also bought $300 million of senior notes with a 15 percent rate from motorcycle maker Harley-Davidson Inc (HOG.N).
USG last month redeemed $325 million of the notes at a premium, and Berkshire exercised its right to swap its securities into USG common stock at just $11.40 per share.
As of September 30, Berkshire held 15.7 percent of USG's common stock, regulatory filings show. That percentage reflects USG's lower number of shares outstanding at the time.
(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)