Fairfax Announces Preliminary Results of Significant Tender Offer

TORONTO, December 24, 2021 (GLOBE NEWSLETTER) – Fairfax Financial Holdings Limited (“Fairfax” or the “Company”) (TSX: FFH and FFH.U) today announced the preliminary results of its substantial takeover bid initially announced on November 17, 2021 (the “Offer”), pursuant to which the Company has offered to purchase for cancellation a number of its subordinate voting shares (“Shares”) for an aggregate purchase price not exceeding US $ 1.0 billion at a purchase price of at least US $ 425.00 and no more than USD 500.00 by Action. Offer expired at 5:00 p.m. (Toronto It’s time 23 December 2021.

In accordance with the terms and conditions of the Offer, and on the basis of the preliminary calculations of Computershare Investor Services Inc. (the “Custodian”), as custodian of the Offer, Fairfax expects to take delivery and purchase for cancellation 2,000,000 Shares at a purchase price of USD 500.00 per share (the “purchase price”) under the offer, representing an aggregate purchase price of US $ 1.0 billion. The shares expected to be purchased under the Offer represent approximately 7.01% of the total number of issued and outstanding Shares and Multiple Voting Shares of Fairfax prior to giving effect to the Offer. From November 17, 2021, on the date of the announcement of the offer, there were 26,986,170 shares and 1,548,000 shares with multiple voting rights issued and outstanding. After giving effect to the Offer, Fairfax expects to have 24,986,170 Shares and 1,548,000 Multiple Voting Shares issued and outstanding.

Based on the preliminary results, 2,208,578 Shares were validly tendered and were not withdrawn in accordance with the Offer (including Shares tendered by notice of guaranteed delivery). Given that the Offer has been oversubscribed, it is expected that shareholders who have made auction offers at a level equal to or lower than USD 500.00 per share and at the purchase price, the number of shares purchased by Fairfax will be prorated to approximately 90.4% of their successfully tendered shares following the determination of the final results of the offer (other than the offers of ” odd lots ”, which are not prorated).

Full details of the Offer are described in the offer to purchase and the prospectus of November 18, 2021, together with the related Letter of Transmittal and Notice of Guaranteed Delivery, copies of which have been filed and are available on SEDAR at www.sedar.com and have also been filed on Schedule 13E-4F with the United States Securities Commission and made available on EDGAR at www.sec.gov (the “Offer Documents”).

The number of shares to be purchased under the offer, the purchase price and the allocation factor mentioned above are preliminary, remain subject to verification by the depositary and assume that all shares deposited by means of a guaranteed delivery notice will be delivered within two trading days settlement period. Fairfax will announce the final results of the Offer after completion of the take-up of the Shares.

Not an offer or a solicitation

This press release is for informational purposes only and does not constitute an offer to buy or a solicitation of an offer to sell Shares. The solicitation and offer to purchase shares by Fairfax has been made in accordance with the offering documents that Fairfax has filed with the Canadian securities regulatory authorities and the United States Securities Commission.

Fairfax is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and related investment management.

Certain statements contained in this document may constitute forward-looking statements and are made in accordance with the “safe harbor” provisions of applicable Canadian securities laws. In particular, statements regarding the offer, including the actual number of shares to be taken up and payable under the offer, the purchase price, the pro-rata factor, the number of shares and of multiple voting shares expected to be issued and outstanding after completion of the Offer, and statements regarding the future results, performance, achievements, prospects or opportunities of the Company, are forward-looking statements . These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause Fairfax’s actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by these forward-looking statements. . These factors include, but are not limited to: reduction in net income if our loss reserves are insufficient; underwriting losses on the risks that we insure that are higher or lower than expected; the occurrence of catastrophic events the frequency or severity of which exceeds our estimates; changes in market variables, including interest rates, currency exchange rates, stock prices and credit spreads, which could adversely affect our investment portfolio; the risks associated with the global pandemic caused by a novel strain of coronavirus (“COVID-19”), and the associated global reduction in trade and substantial declines in stock markets around the world; insurance market cycles and general economic conditions, which can significantly influence our premium rates and those of our competitors and our ability to write new business; insufficient reserves for asbestos, environmental and other latent claims; exposure to credit risk in the event that our reinsurers fail to make payments to us under our reinsurance agreements; exposure to credit risk in the event that our policyholders, insurance producers or reinsurance intermediaries do not pay the premiums due to us or if our policyholders do not reimburse us for the deductibles that we pay on their behalf; our inability to maintain our long-term debt ratings, the inability of our subsidiaries to maintain financial or claims-settlement ratings and the impact of a downgrade in these ratings on derivative transactions that we or our subsidiaries have entered into; the risks associated with the implementation of our business strategies; the timing of claims payments being earlier or the receipt of reinsurance recoverable amounts later than expected by us; the risks associated with any use we may make of derivative instruments; the failure of the hedging methods we can use to achieve the 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 new claims and coverage issues or the failure of any of the loss containment methods we employ; our inability to access liquidity from our subsidiaries; our inability to obtain required levels of capital on favorable 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 adoption of legislation subjecting our business to additional adverse requirements, supervision or regulation, including additional tax regulation, in United States, Canada or other jurisdictions in which we operate; risks associated with government investigations, litigation and negative publicity relating to insurance industry practices or other behavior; risks associated with political and other developments in the foreign jurisdictions in which we operate; risks associated with legal or regulatory proceedings or significant litigation; failures or breaches of the security of our IT and data processing systems; influence exerted by our significant shareholder; unfavorable fluctuations in foreign currency exchange rates; our dependence on independent brokers over whom we have little control; impairment of the carrying amount of our goodwill, our indefinite life intangible assets or our investments in associates; our inability to realize deferred tax assets; technological or other change that negatively impacts demand, or premiums payable, for the insurance coverage we offer; disruptions to our computer systems; valuations and shared market mechanisms that may have a negative impact on our insurance subsidiaries; and the negative consequences for our business, investments and people resulting from or related to the COVID-19 pandemic. Additional risks and uncertainties are described in our most recent annual report, 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 statement, whether as a result of new information, future events or otherwise, except as required by applicable securities law.

Source: Fairfax Financial Holdings