Fairfax Completes US$650 Million Senior Notes Offering
April 29 2020 - 5:02PM
Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U)
has completed its previously announced offering of US$650 million
in aggregate principal amount of 4.625% Senior Notes due 2030 (the
“Notes”). In connection with the closing of the offering, Fairfax
entered into a customary registration rights agreement.
Fairfax will use US$500 million of the net
proceeds from this offering to repay indebtedness under its
unsecured revolving credit facility. The net proceeds in excess of
this amount will be used to repay outstanding debt of Fairfax and
its subsidiaries and for general corporate purposes of Fairfax and
its subsidiaries. This may include the redemption or repurchase of
certain of Fairfax’s previously issued senior unsecured notes
and/or repayment of additional indebtedness under Fairfax’s credit
facility. Except as set forth above, 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 increase short-term
investments and marketable securities held at the holding company
level and/or for other general corporate purposes of Fairfax and
its subsidiaries.
The offering was made solely by means of a
private placement either to qualified institutional buyers pursuant
to Rule 144A under the U.S. Securities Act of 1933, as amended (the
“Securities Act”), or to certain non-U.S. persons in offshore
transactions pursuant to Regulation S under the Securities Act. The
Notes have not been registered under the Securities Act and the
Notes may not be offered or sold in the United
States absent registration or an applicable exemption from the
registration requirements of the Securities Act. The Notes have not
been and will not be qualified for sale under the securities laws
of any province or territory of Canada and may not be offered or
sold directly or indirectly in Canada or to or for the benefit of
any resident of Canada, except pursuant to applicable prospectus
exemptions.
This press release shall not constitute an offer
to sell or the solicitation of an offer to buy any securities in
any jurisdiction in which such offer or solicitation would be
unlawful. Any offers of the Notes have been made only by means of a
private offering memorandum.
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: |
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John Varnell, Vice President, Corporate Development at |
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(416) 367-4941 |
Forward-looking information
Certain statements contained herein may include
“forward-looking information” within the meaning of Canadian
securities laws and “forward-looking statements” within the meaning
of Section 27A of the U.S. Securities Act of 1933, as amended,
Section 21E of the U.S. Securities Exchange Act of 1934, as
amended, “safe harbor” provisions of the United States Private
Securities Litigation Reform Act of 1995 and in any applicable
Canadian securities regulations. Such forward-looking information
may include, among other things, the intended use of net proceeds
from the offering of Notes and the performance of Fairfax’s
obligations under the registration rights agreement. Such
forward-looking information 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 information. Such factors include,
but are not limited to: the risk of adverse consequences to
Fairfax’s business, investments and personnel resulting from or
related to the COVID-19 pandemic; the failure to successfully
complete the offering; our ability to refinance and/or repay
certain of our outstanding debt or other corporate obligations with
the proceeds of the offering on terms acceptable to us; 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; including risks associated with a global pandemic caused
by a novel strain of coronavirus, COVID-19, and the related global
reduction in commerce and travel and substantial downturns in stock
markets worldwide; 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 adverse requirements, additional supervision or
regulation, including additional tax regulation, in the United
States, Canada or other jurisdictions in which we operate; risks
associated with applicable laws and regulations relating to
sanctions and corrupt practices in foreign 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, indefinite-lived intangible assets or
investments in associates; 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 on EDGAR at www.sec.gov or on SEDAR at www.sedar.com.
Fairfax disclaims any intention or obligation to update or revise
any forward-looking information.
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