Goldman Sachs Pays Back Buffett His $5.5 Billion

Monday, 18 Apr 2011 | 1:34 PM ET

Billionaire investor Warren Buffett received a $5.5 billion check from Goldman Sachs, repaying an investment Buffett made in Goldman at the height of the financial crisis, CNBC learned Monday.

Berkshire Hathaway CEO Warren Buffett
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Berkshire Hathaway CEO Warren Buffett

In September of 2008, the CEO of Berkshire Hathaway and longtime Goldman Sachs client bought $5 billion in preferred stock in Goldman and received warrants to buy $5 billion of its common stock.

At the time, Buffett's investment was a sign of confidence in the bank and helped to boost its stock price. It was also a smart investment by the "Oracle of Omaha," as the preferred shares paid a hefty 10 percent dividend.

Buffett told CNBC the check consists of $5 billion to buy back the 50,000 preferred shares he aquired, plus a $500 million dividend. Buffet continues to hold warrants to buy 43,478,260 shares of the New York-based bank.

The warrants, which can be exercised over the next two and a half yars, have a strike price of $115. With Goldman trading at about $152.97, Buffett stands to make a hefty profit from the warrants as well. Get real-time Goldman quotes here.

Goldman announced it would buy back the preferred shares in March, after passing its latest stress test. It said it would take a charge of $2.80 a share in the first quarter to cover the costs of the buyback.

In comments to CNBC Monday, the firm said that "Berkshire Hathaway's September 2008 investment in Goldman Sachs was a major vote of confidence in our firm, and we are very appreciative of it."

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