Mr. John Varnell reports
FAIRFAX ANNOUNCES MODIFICATION OF PRICING TERMS AND EXTENSION OF CASH TENDER OFFER FOR SENIOR NOTES
Fairfax Financial Holdings Ltd. has amended the terms of its previously announced modified Dutch auction tender offers to purchase a targeted aggregate principal amount of notes of up to $250-million consisting of its outstanding 7.50 per cent senior notes due 2019, 7.25 per cent senior notes due 2020 and 6.40 per cent senior notes due 2021. Capitalized terms used but not defined in this press release have the meanings set forth in the offer to purchase dated Jan. 30, 2017.
The amendments to the offers to purchase the 2019 notes, the 2020 notes and the 2021 notes include: (i) modifying the applicable minimum fixed spread in respect of each series of notes and providing additional tender spread choices that may be selected by holders of notes in their tender instructions, and (ii) extending the expiration time and the withdrawal deadline to 5 p.m. (Toronto time) on March 10, 2017.
The attached series of notes table sets out, for each series of notes, the outstanding principal amount and certain other information, including the modified spread range, which will be used to determine the offer consideration (as defined below) for each series of notes.
SERIES OF NOTES
Title of security Cusip Principal GoC RBC Maximum Original Modified
amount reference reference fixed minimum minimum
outstanding security page spread fixed fixed
spread spread
7.50% senior notes 303901AQ5 $400,000,000 Cdn 1.75% RBCB 155 bps 140 bps 125 bps
due 2019 Sept. 1,
2019 (1)
7.25% senior notes 303901AR3 $275,000,000 Cdn 3.50% RBCB 175 bps 165 bps 150 bps
due 2020 June 1,
2020 (2)
6.40% senior notes 303901AU6 $400,000,000 Cdn 3.25% RBCB 185 bps 175 bps 160 bps
due 2021 June 1,
2021 (3)
(1) A 1-3/4ths per cent government of Canada bond due September, 2019 (ISIN:
CA135087C855).
(2) A 3-1/2 per cent government of Canada bond due June, 2020 (ISIN:
CA135087YZ11).
(3) A 3-1/4th per cent government of Canada bond due June, 2021 (ISIN:
CA135087ZJ69).
Except as set forth herein, all other terms, provisions and conditions of the offers will remain in full force and effect as set forth in the offer to purchase and the related letter of transmittal. There are no other modifications or extensions being made with respect to the offers other than those announced herein.
Holders who have previously tendered notes but do not wish to change their tender instructions need not take any further action. Holders who previously tendered their notes and wish to change their tender instructions may withdraw their notes and retender their notes with new tender instructions at any time prior to 5 p.m. (Toronto time) on March 10, 2017.
The offers are being made to the registered holders of the notes upon the terms and subject to the conditions described in the offer to purchase and the related letter of transmittal. Beneficial owners of notes must follow the procedures for tendering outlined in the offer to purchase and are advised to contact their broker, dealer, commercial bank, trust company or other intermediary through which they hold notes.
The offer consideration in respect of each series of notes properly tendered, not validly withdrawn and accepted by Fairfax for purchase, will be a price, expressed in Canadian dollars, per $1,000 principal amount, to be determined by Fairfax at the time of pricing as described in the offer to purchase, in accordance with market convention and pursuant to a modified Dutch auction, and will be the price which reflects the yield to maturity on the settlement date of the offers equal to the sum of: (a) the bid-side yield on the relevant government of Canada bond; and (b) the relevant clearing spread (as defined herein). Specifically, the offer consideration per $1,000 principal amount of each series of notes will equal: (a) the value per $1,000 principal amount of all remaining payments of principal and interest due to be made up to and including the maturity date of the notes, discounted to the settlement date at a discount rate equal to the purchase yield, minus (b) the accrued interest (as defined herein). The offer consideration will be payable in cash.
In addition to the offer consideration, holders who properly tender and do not validly withdraw their notes will also be paid, on those notes that are accepted for purchase by Fairfax, accrued and unpaid interest from the last interest payment date to, but excluding, the settlement date, as applicable.
The offers are being conducted as a modified Dutch auction. Under the modified Dutch auction procedures, holders may submit tender instructions at the base spread (which is the maximum fixed spread for the relevant series) or on a competitive basis, as more particularly described in the offer to purchase. If Fairfax decides to accept any tenders of notes for purchase, Fairfax will determine the relevant tender spread in whole basis points for each series of notes in accordance with the procedures described in the offer to purchase. The clearing spread in respect of each series of notes will apply to all notes of the relevant series accepted for purchase by Fairfax and will be the lower of: (i) the relevant maximum fixed spread; and (ii) the single highest spread specified in the tender instructions received on a competitive basis by tendering holders that will enable Fairfax to purchase its desired principal amount of notes of the relevant series. Following the expiration time, as extended by this press release, Fairfax will determine the clearing spread for each series of notes and will announce the results of the offers by press release. This will include, for each series of notes, the clearing spread, purchase yield, offer consideration, the aggregate principal amount of notes to be purchased by Fairfax and the aggregate principal amount of notes that will remain outstanding.
The offers will expire at 5 p.m. (Toronto time) on March 10, 2017, unless further extended or earlier terminated as described in the offer to purchase. Holders of notes must properly tender and not validly withdraw their notes on or prior to the expiration time, as extended by this press release, to receive the offer consideration for their notes. Tendered notes may be withdrawn by holders at any time prior to 5 p.m. (Toronto time) on March 10, 2017, unless further extended by Fairfax.
Following consummation of the offers, any notes that are purchased in the offers will be retired and cancelled and no longer remain outstanding.
The above dates and times are subject, where applicable, to the right of Fairfax to further extend, reopen, amend and/or terminate the offers, subject to applicable laws. Fairfax may increase or decrease the target amount at any time in its sole discretion. Holders should be aware that their broker, dealer, commercial bank, trust company or other intermediary will establish its own earlier deadlines for participation in, or withdrawal from, any of the offers.
The complete terms and conditions of the offers are set forth in the offer to purchase and letter of transmittal. Holders are encouraged to read those documents carefully before taking action with respect to the offers.
The relevant dates with respect to the offers have been extended as follows:
RELEVANT OFFER DATES
Original date Extended date
Expiration time 5 p.m. Toronto time on Feb. 23, 2017 5 p.m. Toronto time on March 10, 2017,
unless further extended or terminated
by Fairfax in its sole discretion
Withdrawal deadline 5 p.m. Toronto time on Feb. 23, 5 p.m. Toronto time on March 10, 2017,
2017 unless further extended or terminated
by Fairfax in its sole discretion
Announcement of 9 a.m. Toronto time on Feb. 24, 2017 9 a.m. Toronto time on March 13, 2017,
clearing spreads and unless further extended or terminated
indicative final by Fairfax in its sole discretion
acceptance amount,
series acceptance
amounts and
proration
Pricing and At or around 11 a.m. Toronto time, At or around 11 a.m. Toronto time on
determination of on Feb. 24, 2017 March 13, 2017, unless further extended
offer consideration or terminated by Fairfax in its sole
discretion
Announcement of As soon as reasonably practicable As soon as reasonably practicable
results following the pricing time following the pricing time
Settlement date On or about March 1, 2017 On or about March 16, 2017
RBC Capital Markets is the exclusive dealer manager for the offers. Questions regarding the offers may be directed to RBC Capital Markets at 416-842-6311 or liability.management@rbccm.com. TSX Trust Company has been retained as depositary for the offers. Requests for documents may be directed to TSX Trust Company at 1-866-600-5869 or TMXEcorporateactions@tmx.com.
None of Fairfax, its board of directors or officers, the dealer manager, and the depositary or the trustee for the notes makes any recommendation as to whether holders should tender or refrain from tendering their notes in the offers, and no one has been authorized by any of them to make such a recommendation. Holders must make their own decision as to whether to tender their notes and, if so, the principal amount of notes to tender and the tender spread(s) at which such notes will be tendered.
Fairfax is a holding company, which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.
We seek Safe Harbor.
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