Berkshire Hathaway CEO Warren Buffett Denies Rift With Kraft-Heinz Partner, 3G Capital

Billionaire investor Warren Buffett, the CEO of investment firm Berkshire Hathaway (BRK-A), has denied tensions with Brazilian firm 3G Capital, his partner in the underperforming Kraft Heinz Co. (KHC). He called 3G Capital co-founder Jorge Paolo Lemann "a good friend" and mentioned that he will go to Lemann's 80th birthday in August.

But Buffett acknowledged to CNBC "the difficulties stemming from his 26.7% stake in the group and the $3 billion goodwill writedown he was forced to take in February."

Kraft Heinz has been Berkshire Hathaway's biggest loss among major holdings in 2019.

Berkshire Hathaway and 3G Capital had bought Heinz for $23.3 billion February 2013. Heinz merged with Kraft Foods Group in March 2015, with Berkshire Hathaway owning $9.5 billion worth of common stock in the newly merged company.

Kraft Heinz has faced a turbulent year as its price of shares has plummeted nearly 52% over the past 12 months due to debt and financial misconduct issues.

In an interview with Yahoo Finance, Guggenheim Securities analyst Laurent Grandet said that Kraft Heinz's balance sheet "is constrained by a high debt burden" and that the company is running out of cash, while adding that new CEO Miguel Patricio faces a "monumental challenge."

Grandet said the company must invest $700 to $800 over two years "to jumpstart sales growth."

Buffett said that he regrets "paying too much" for Kraft in 2015. The company has roughly $31 billion in debt.

"It will take time to whittle that down," Buffett said.

A lack of cash and high debt aren't the company's only woes. Kraft Heinz is also facing a Securities and Exchange Commission investigation after employee misconduct caused the company to revise its 2016 and 2017 earnings.