Berkshire Agrees to Buy $300 Million of Harley Debt Sunday, February 08, 2009 (06:02:48) This article contributed by editor Billionaire investor Warren Buffett's Berkshire Hathaway Inc. agreed to buy $300 million of debt from Harley-Davidson Inc., the biggest motorcycle maker, adding to holdings of corporate debt as yields rise. Berkshire will get 15 percent interest on the senior unsecured notes. Davis Selected Advisers LP, the largest holder Harley's stock, also committed to purchase $300 million of debt, the Milwaukee-based motorcycle company said in a statement today. Buffett has been adding holdings of fixed-income securities to help deploy more than $30 billion in Berkshire's cash. The Omaha, Nebraska-based firm held about $9.7 billion in corporate debt and redeemable preferred stock at its insurance units as of Sept. 30, an increase of 61 percent from a year earlier. In November, Buffett agreed to buy $300 million in debt from USG Corp., North America's largest maker of gypsum wallboard. "He's got cash coming in faster than most people would have a ready place to put it," said Frank Betz, a partner at Carret Zane Capital Management, which holds Berkshire shares. "He probably looks at Harley motorcycles as having a strong long-term demand in the marketplace." Harley is the world's largest seller of cruisers, models for leisure riding that are often equipped with engines 1000cc or larger, chrome exhaust pipes and 1950s styling. Harley-Davidson said Jan. 23 fourth-quarter profit fell 58 percent due to weaker demand for its motorcycles. The net income of $77.8 million, or 34 cents a share, was the lowest quarterly profit in nine years. Fat Boy Sales for the maker of Fat Boy and other cruisers fell in 2008 as the U.S. economy slowed and access to consumer credit tightened. List prices for Harleys range from $6,999 to $35,499. Harley-Davidson is working to cut 1,100 jobs and close three plants to save at least $60 million a year. About 70 percent of the firings will take place this year and the rest in 2010, the company said. Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc. and Deutsche Bank AG helped with the transaction. Harley Davidson gained $1.04, or 8.8 percent, to $12.90 at 10:30 a.m. in New York Stock Exchange composite trading. Berkshire advanced $300, or 0.3 percent, to $89,700. Source: Bloomberg Content received from: Brain Bucket Magazine, http://brainbucketmag.com