Fairfax Launches C$500 Million Senior Notes Offering
June 11 2019 - 4:01PM
Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U)
announces that it intends to offer C$500 million in aggregate
principal amount of Senior Notes due 2029 (the “Offering”) to be
priced at C$99.952 per C$100 principal amount. The Senior Notes
will be offered through a syndicate of dealers to be led by BMO
Nesbitt Burns Inc. and RBC Dominion Securities Inc., as joint
bookrunners, and including CIBC World Markets Inc., Desjardins
Securities Inc., National Bank Financial Inc., Scotia Capital Inc.,
TD Securities Inc., Citigroup Global Markets Canada Inc., J.P.
Morgan Securities Canada Inc. and Merrill Lynch Canada Inc., as
agents. The Senior Notes will be unsecured obligations of Fairfax
and will pay a fixed rate of interest of 4.23% per annum.
Fairfax intends to use the net proceeds of the
Offering to refinance or repay outstanding debt or other corporate
obligations of Fairfax and its subsidiaries and for general
corporate purposes. This may include the redemption or repurchase
of certain of Fairfax’s previously issued senior unsecured notes.
As of the date of this press release, Fairfax has not made any
determination as to the specific debt or other obligations to be
repaid, nor the amount, timing or method of repayment. Any
repurchase of senior notes will be subject to market conditions,
and there can be no assurance that senior notes will be available
for repurchase on terms acceptable to Fairfax. Any proceeds not
used to refinance or repay debt or other corporate obligations will
be used to augment Fairfax’s cash position, to pursue potential
acquisition opportunities, to increase short-term investments and
marketable securities held at the holding company level and/or for
other general corporate purposes.
Fairfax intends to file a prospectus supplement
to its short form base shelf prospectus dated October 19, 2017 (the
“Base Shelf Prospectus”) in respect of the Offering with the
applicable Canadian securities regulatory authorities. Details of
the Offering will be set out in the prospectus supplement which
will be available on the SEDAR website for Fairfax at
www.sedar.com.
This press release shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be
any sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
This press release is not an offer of securities for sale in the
United States, and the securities may not be offered or sold in the
United States absent registration or an exemption from the
registration requirements. The securities have not been and will
not be registered under the United States Securities Act of 1933,
as amended.
Fairfax is a holding company which, through its
subsidiaries, is engaged in property and casualty insurance and
reinsurance and the associated investment management.
For further information, contact: John Varnell,
Vice President, Corporate Development and
Chief Financial Officer,
at
(416) 367-4941
Certain statements contained herein may
constitute forward-looking statements and are made pursuant to the
“safe harbor” provisions of applicable Canadian securities laws.
Such forward-looking statements are subject to known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Fairfax to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such
factors include, but are not limited to: the failure to
successfully complete the Offering; a reduction in net earnings if
our loss reserves are insufficient; underwriting losses on the
risks we insure that are higher or lower than expected; the
occurrence of catastrophic events with a frequency or severity
exceeding our estimates; changes in market variables, including
interest rates, foreign exchange rates, equity prices and credit
spreads, which could negatively affect our investment portfolio;
the cycles of the insurance market and general economic conditions,
which can substantially influence our and our competitors’ premium
rates and capacity to write new business; insufficient reserves for
asbestos, environmental and other latent claims; exposure to credit
risk in the event our reinsurers fail to make payments to us under
our reinsurance arrangements; exposure to credit risk in the event
our insureds, insurance producers or reinsurance intermediaries
fail to remit premiums that are owed to us or failure by our
insureds to reimburse us for deductibles that are paid by us on
their behalf; our inability to maintain our long term debt ratings,
the inability of our subsidiaries to maintain financial or claims
paying ability ratings and the impact of a downgrade of such
ratings on derivative transactions that we or our subsidiaries have
entered into; risks associated with implementing our business
strategies; the timing of claims payments being sooner or the
receipt of reinsurance recoverables being later than anticipated by
us; risks associated with any use we may make of derivative
instruments; the failure of any hedging methods we may employ to
achieve their desired risk management objective; a decrease in the
level of demand for insurance or reinsurance products, or increased
competition in the insurance industry; the impact of emerging claim
and coverage issues or the failure of any of the loss limitation
methods we employ; our inability to access cash of our
subsidiaries; our inability to obtain required levels of capital on
favourable terms, if at all; the loss of key employees; our
inability to obtain reinsurance coverage in sufficient amounts, at
reasonable prices or on terms that adequately protect us; the
passage of legislation subjecting our businesses to additional
supervision or regulation, including additional tax regulation, in
the United States, Canada or other jurisdictions in which we
operate; risks associated with government investigations of, and
litigation and negative publicity related to, insurance industry
practice or any other conduct; risks associated with political and
other developments in foreign jurisdictions in which we operate;
risks associated with legal or regulatory proceedings or
significant litigation; failures or security breaches of our
computer and data processing systems; the influence exercisable by
our significant shareholder; adverse fluctuations in foreign
currency exchange rates; our dependence on independent brokers over
whom we exercise little control; an impairment in the carrying
value of our goodwill and indefinite-lived intangible assets; our
failure to realize deferred income tax assets; technological or
other change which adversely impacts demand, or the premiums
payable, for the insurance coverages we offer; disruptions of our
information technology systems; and assessments and shared market
mechanisms which may adversely affect our insurance subsidiaries.
Additional risks and uncertainties are described in our most
recently issued Annual Report which is available at www.fairfax.ca
and in our Base Shelf Prospectus (under “Risk Factors”) filed with
the securities regulatory authorities in Canada, which is available
on SEDAR at www.sedar.com. Fairfax disclaims any intention or
obligation to update or revise any forward-looking statements.
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