Warren Buffett’s cash pile is very likely to have a little bigger this week.
Burger King-owner Restaurant Brands International Inc. is scheduled to redeem $3-billion in preferred shares Tuesday from Buffett’s Berkshire Hathaway Inc.. The money helped the fast-food chain fund its 2014 purchase of Tim Hortons.
The payoff will take away a profitable investment for Berkshire and add to Buffett’s arsenal for investments and takeovers. At the end of the next quarter, Buffett’s Omaha, Nebraska-based holding company had a record $109-billion in money. The billionaire has fought some on the deal this season with two big, possible acquisitions slipping away.
In the time Buffett made the favored investment in Restaurant Brands, it was an attractive way to set some cash to work. The securities pay 9 percent — or about $270-million — in earnings annually. The arrangement also strengthened a burgeoning relationship between Buffett and 3G Capital, the buyout store that controls Restaurant Brands. Berkshire and 3G possess a controlling stake in packaged-food giant Kraft Heinz Co..
Restaurant Brands executives stated in October, once the company announced it intended to cover Buffett back, the move would decrease debt payments and free up money. The securities can be redeemed for a 9.9-per-cent premium, Berkshire said in a regulatory filing last month, so the money inflow might be more than $3 billion.
Restaurant Brands agreed to buy Popeyes Louisiana Kitchen earlier this season, including the fried-chicken series to its stable of brands. While Popeyes and Tim Hortons have fought to maintain expansion — a dispute with Canadian franchisees of Tim Hortons has hampered that surgery — Burger King has posted strong results lately, even as a resurgence in McDonald’s Corp. adds to the competitive pressure in the U.S. fast-food market.