Fairfax Launches C$850 Million Senior Notes Offering
February 24 2021 - 10:53AM
Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U)
announces that it will issue C$850 million in aggregate principal
amount of Senior Notes due 2031 (the “Offering”) in a public
offering to a syndicate of underwriters led by Scotiabank, BMO
Capital Markets, and RBC Capital Markets as joint bookrunners. The
Senior Notes will be unsecured obligations of Fairfax and will pay
a fixed rate of interest of 3.95% per annum.
Fairfax intends to use the net proceeds of the
Offering to redeem (i) the C$450 million outstanding principal
amount of Fairfax’s 5.84% senior notes due 2022 (plus accrued and
unpaid interest thereon and the applicable premium) (the “2022
Notes”) and (ii) the C$400 million outstanding principal amount of
Fairfax’s 4.50% senior notes due 2023 (plus accrued and unpaid
interest thereon and the applicable premium) (the “2023 Notes”).
Fairfax intends to use the balance of the net proceeds of the
Offering, if any, to refinance or repay other outstanding debt or
corporate obligations of Fairfax and its subsidiaries and for
general corporate purposes. This may include the redemption or
repurchase of certain of Fairfax’s other previously issued senior
unsecured notes. As of the date of this press release, with the
exception of the 2022 Notes and the 2023 Notes, 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. Except
for the redemption of the 2022 Notes and the 2023 Notes, 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 22, 2019 (the
“Base Shelf Prospectus”) in respect of the Offering with the
applicable Canadian securities regulatory authorities in all of the
provinces and territories of Canada. 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 |
|
(416) 367-4941 |
Certain statements contained herein may
constitute forward-looking statements and are made pursuant to the
“safe harbour” provisions of applicable Canadian securities laws.
The forward-looking information in this release includes, without
limitation, expectations regarding the Company’s expectations to
complete the Offering and the Company’s intention to redeem the
2022 Notes and 2023 Notes and the expected manner of funding
thereof. 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;
risks associated with the global pandemic caused by COVID-19, and
the related global reduction in commerce 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 additional adverse requirements,
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; impairment of 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; assessments and
shared market mechanisms which may adversely affect our insurance
subsidiaries; and adverse consequences to our business, our
investments and our personnel resulting from or related to the
COVID-19 pandemic. 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, whether as a result of new information,
future events or otherwise, except as required by applicable
securities law.
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