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Shares of Home Capital Group Inc. recovered ground on Monday after the troubled alternative mortgage lender named three veteran business executives to its board even as it revealed it has used $1.4-billion of its $2-billion credit line and suspended its dividend.

The mortgage lender said Claude Lamoureux, Paul Haggis and Sharon Sallows have joined its board effective immediately and independent director Brenda Eprile, who joined the board last year, has been appointed chair. Former chair Kevin Smith will remain a director.

Mr. Lamoureux in particular has a high profile as former chief executive of the Ontario Teachers' Pension Plan and a founder of the powerful Canadian Coalition for Good Governance. He said on Monday that he did not seek the job, but agreed to join the board because he believes he can help the company.

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"I think this is an organization that needs help, and I'm willing to help," he said in an interview. "To me, this is an important organization in Canada, and I'm willing to lend a hand."

Home Capital announced on Friday that former Royal Bank of Canada executive Alan Hibben will also join the board as the company's founder Gerald Soloway stepped down as part of a governance renewal process.

The mortgage lender has faced a run on its deposits since April, when the Ontario Securities Commission accused the company and three current and former executives of providing misleading disclosures to investors about an internal investigation into mortgage underwriting problems. The OSC alleges the company knew about mortgage fraud, but failed to tell investors for months. Home Capital disputes the claim.

Mr. Lamoureux said the right board with a focus on good governance can improve the company.

"Where did they get in trouble? Not telling the truth right away," he said. "To me, it's simple in life – you just have to tell the facts, and people can see if they are bad facts or good facts."

The company announced it had obtained a new $2-billion line of credit in late April, and said on Monday it has so far used $1.4-billion of it. It still has no rescue deal, saying on Monday its advisers are working on finding lower-cost financing, or a buyer or partner.

The company also announced on Monday it has suspended paying its quarterly dividend to shareholders "to prudently manage liquidity."

Home Capital said the amount depositors have in high-interest savings accounts at subsidiary Home Trust has shrunk to $192-million from $391-million last Monday. Home Trust's savings account deposits stood at $2-billion at the end of March, but have faced huge withdrawals that started two weeks ago.

The company also reported that its online retail subsidiary, Oaken Financial, has savings account deposits of $167-million, down from $222-million as of Friday, April 28. GIC deposits totalled $12.64-billion on Friday, down from $12.86-billion on April 28.

Home Capital said it had liquid assets of $1.16-billion as of Friday.

Several analysts praised the company's moves to remake its board, saying the new directors add needed expertise, especially with a new financing or restructuring looming.

"This is a very high calibre of new members," said analyst Jeff Fenwick of Cormark Securities Inc. "These additions offer significant credibility to the view that a solution will be found to stabilize Home sufficiently to support an orderly process for pursuing the best strategic options for the firm."

Shares of Home Capital climbed 17 per cent or 98 cents to close at $6.83 on the Toronto Stock Exchange after the announcement.

Mr. Haggis is a former CEO of the Ontario Municipal Employees Retirement System (OMERS) and previously headed Alberta Treasury Branches, a financial institution owned by the province of Alberta.

Ms. Sallows has a background in lending and investment, previously holding senior roles at the Bank of Montreal and MICC Properties. She has been a partner at private-sector merchant banking firm Ryegate Capital and was a director on the Teachers' board.

Ms. Eprile, who is the new board chair, is a former executive director and chief accountant at the Ontario Securities Commission and a former partner at accounting firm PriceWaterhouseCoopers.

"I took on the role as chair because I believe in the fundamental premise of Home Capital, which is to assist home buyers, many of whom are new Canadians, to obtain mortgage financing and achieve their dream of home ownership," Ms. Eprile said.

Despite the enthusiasm about the new board, analysts warned they have concerns about the company's funding and whether it is still getting new mortgage business.

Bond rater DBRS Inc. said Home Capital's liquidity and funding "have yet to show signs of stability."

Dylan Steuart at Industrial Alliance Securities said in a note to investors that the board revamp was "a necessity given the reputational issues facing the company," but is "offset" by signs of a continuing outflow of funding.

He said the suspension of the dividend – which costs the company $65-million a year – comes as little surprise, but the key question remains how the company's outstanding mortgage loans are faring.

May and June are the most active period for home buying in Canada, which means they will also be crucial for assessing Home Capital's ability to write and renew mortgages.

Marc Charbin at Laurentian Bank Securities said he is concerned Home Capital may lose business to competitors.

"Given the increased competition in near-prime lending in the last several years, it is reasonable to believe that a material portion of HCG's mortgage assets could find another home," he warned in a note to investors.

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