Billionaire Warren Buffet Buys 300 Million Of Harley-Davidson Debt

harleywallstreetAs the global credit crunch weakens corporations, Warren Buffett’s Berkshire Hathaway Inc. is arranging private deals with some of the most recognizable U.S. brands and taking advantage of rising interest rates. Berkshire agreed to buy $300 million of Harley-Davidson debt, getting a huge 15 percent interest on the senior unsecured note. Davis Selected Advisers LP, the largest holder of the company’s stock, also committed to buy $300 million of debt. Harley, which is raising cash to lend to customers rose the most amount of money in more than two decades in New York trading. Warren Buffet probably sees Harley motorcycles as having a strong long-term demand in the marketplace. The debt sale provides only a short-term fix because Harley-Davidson has $500 million in bank debt coming due at the end of next month and needs about $1 billion to extend loans to customers through its financing arm.

13 Responses to “Billionaire Warren Buffet Buys 300 Million Of Harley-Davidson Debt”

  1. 1 Dave B. Feb 4th, 2009 at 8:25 am

    I think Mr. Buffet expects to have his shares bought back (with interest of course) when things pick up in a couple of years. Seems pretty smart.

  2. 2 Scott Feb 4th, 2009 at 9:29 am

    Dave that is exactly what Warren Buffet does for a living. This should be seen as a vote of confidence for the motor company. Maybe, with Buffett’s input the BOD will see the errors in their ways, cut the crap and get back to making bikes.

  3. 3 Strada Feb 4th, 2009 at 9:34 am

    The Fed is at 0% and H-D is paying 15%, Buffett had 300M lying around and at 15% why not?

    If H-D is paying 15% they are going to lend the money at what rate?

  4. 4 J Feb 4th, 2009 at 11:08 am

    LOL- Warren Buffet buys leverage into deals he wants, and winds up owning them when there is maximum pain- this is why he buys paper, and not stocks.

    This is Buffet sticking his toe in the water- he’ll wind up owning brand assets for pennies on the dollar, which is what Warren and Charlie do- simple business.

  5. 5 fuji Feb 4th, 2009 at 2:31 pm


    Spot on “ If HD can survive Buffett will win if the don’t Buffett will win.

    The Berkshire Hathaway Company was living on borrowed time on May 10, 1965, the day Warren Buffett arrived at its New Bedford headquarters and seized control, Then came the sale assets when it could no longer make a profit.

  6. 6 fuji Feb 4th, 2009 at 5:56 pm

    Buffetts investment was in bonds One thing that does surprise me is that Buffet did ‘ NOT ‘invest with a stock option warrant. That would indicate that he is not confident with Harleys stock at this time a buy.

  7. 7 spackler Feb 4th, 2009 at 8:09 pm

    Loaning at 15% is no vote of confidence.

  8. 8 Nitrous Phil Feb 5th, 2009 at 12:36 am

    I’m too busy with bike to be aware of these kind of things – good job Cyril in keeping us informed.
    Mr. Buffet know whats he’s doing

  9. 9 rodent Feb 5th, 2009 at 9:04 am

    15% sets a new high considering todays prime rate

  10. 10 Vic Feb 8th, 2009 at 7:49 pm

    15%! unbelieveable. H-D’s credit must really be in the crapper if they took that deal.

  11. 11 Geno Feb 9th, 2009 at 9:48 am

    I do not get it.
    Harley made billlons and billions in the last 10 years with dated technology and selling bikes and coffee at retail at all its new and improved Bloomingdale style outlets (God I am glad I am old enough to remember the old Harley dealers with the linoleum floors and one tee shit to buy, the Harly mystique was alive and well then)
    and now that there is a dip in the road and no one wants an ugly trike or god awful Rocker C they need to run to the
    guvment and Mr Buffet for a bail out?

    Why doesn’t anyone see the elephant in the room.

    Letter to Harley-The World is Watching.

  12. 12 fuji Feb 11th, 2009 at 6:44 pm

    Lets see now, you have a heavy investor in a well known motorcycle insurance co and also dips into a well known motorcycle co.

    So let it be known that it was just a fluke that the two go hand in hand. Gieco and Harley , you wouldn’t assume that it was planned

    I mean just knowing that fifty percent of the market is name brand loyal.

  13. 13 Mike Greenwald Jun 25th, 2009 at 10:09 am

    Source: CNBC

    In a live interview on CNBC today, Warren Buffett said there has been little progress over the past few months in the “economic war” being fought by the country. “We haven’t got the economy moving yet,” he told Becky Quick.


    While the economy is a “shambles” and likely to stay that way for some time, he remains optimistic there will eventually be a recovery over a period of years.

    BECKY: The last time we sat down to talk to you was on May 4, and at that point you told us that you think we’re in an economic war right now. How much progress do you think we’ve made in that war?

    BUFFETT: Well, it’s been pretty flat. I get figures on 70-odd businesses, a lot of them daily. Everything that I see about the economy is that we’ve had no bounce. The financial system was really where the crisis was last September and October, and that’s been surmounted and that’s enormously important. But in terms of the economy coming back, it takes a while. There were a lot of excesses to be wrung out and that process is still underway and it looks to me like it will be underway for quite a while. In the (Berkshire Hathaway) annual report I said the economy would be in a shambles this year and probably well beyond. I’m afraid that’s true.

    Buffett also noted that he had a cataract operation on his left eye about a month ago. He joked that he thought it might help him see “green shoots” for the economy, but so far he hasn’t seen any hopeful signs.

    Taking a firm position in an ongoing debate in the financial markets, Buffett says he’s not concerned about deflation, but thinks inflation will be a problem in coming years.

    Despite his negative view on the economy, Buffett still believes the stock market is attractive “over the next 10 years” when compared to alternatives like Treasury bonds.

    Buffett endorsed Ben Bernanke’s reappointment as Federal Reserve Chairman, saying “you couldn’t do better.” He also praised Treasury Secretary Tim Geithner.

    Asked about how Apple handled Steve Jobs’ liver transplant, Buffett said it is a “material fact” when the CEO of a company is facing major surgery. He thinks criticism of Apple over the matter is appropriate.

    Buffett repeated his criticism of “cap and trade” as a method to control pollution, saying it would be a huge, regressive tax.

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Cyril Huze