SECURITIES AND EXCHANGE COMMISSION
UNDER THE
SECURITIES ACT OF 1933
Canada (Province or other jurisdiction of incorporation or organization) | 6331 (Primary Standard Industrial Classification Code Number) | Not Applicable (I.R.S. Employer Identification Number) |
(Address and telephone number of Registrant’s principal executive offices)
111 Eighth Avenue, 13th Floor, New York, NY 10011
(212) 894-8700
(Name, address and telephone number of agent for service in the United States)
Eric P. Salsberg Vice President, Corporate Affairs Fairfax Financial Holdings Limited 95 Wellington Street West, Suite 800 Toronto, Ontario, Canada M5J 2N7 Telephone (416) 367-4941 | Christopher J. Cummings Shearman & Sterling LLP Commerce Court West 199 Bay Street, Suite 4405 Toronto, Ontario, Canada M5L 1E8 Telephone (416) 360-8484 | David A. Chaikof Torys LLP 70 Wellington Street West, Suite 3000 Box 270, TD Centre Toronto, Ontario, Canada M5K 1N2 Telephone (416) 865-0040 |
A. | þ | Upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada). |
B. | o | At some future date (check the appropriate box below): |
1. | o | pursuant to Rule 467(b) on ( ) at ( ) (designate a time not sooner than 7 calendar days after filing). | |
2. | o | pursuant to Rule 467(b) on ( ) at ( ) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on ( ). | |
3. | o | pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto. | |
4. | o | after the filing of the next amendment to this Form (if preliminary material is being filed). |
Title of Each Class of | Amount to be | Proposed Maximum | Proposed Maximum Aggregate | Amount of | ||||||||||||||||||
Securities to be Registered | Registered | Offering Price | Offering Price(1)(2) | Registration Fee | ||||||||||||||||||
Subordinate Voting Shares Preferred Shares Debt securities Subscription Receipts Warrants Share purchase contracts Units(3) | ||||||||||||||||||||||
Total | $ | 2,000,000,000 | $ | 2,000,000,000 | $ | 142,600 | (4) | |||||||||||||||
(1) | Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. The initial public offering price of any debt securities denominated in any foreign currencies or currency units shall be the U.S. dollar equivalent thereof based on the prevailing exchange rates at the respective times such securities are first offered. With respect to debt securities issued at an offering price less than the principal amount at maturity, the amount to be registered will be equal to the aggregate offering price. | |
(2) | Exclusive of accrued interest, if any. | |
(3) | The aggregate initial offering price of the securities registered pursuant to this registration statement will not exceed $2,000,000,000. Such amount represents such indeterminate principal amount of debt securities or number of subordinate voting shares, preferred shares, subscription receipts, warrants, share purchase contracts and units of Fairfax Financial Holdings Limited, as may, from time to time, be issued at indeterminate prices, including such indeterminate principal amount of debt securities or number of subordinate voting shares or preferred shares as may be issued upon conversion or exchange of any debt securities or preferred shares that provide for conversion or exchange into such securities or upon exchange of subscription receipts or exercise of warrants for such securities or upon settlement of share purchase contracts for subordinate voting shares or preferred shares. | |
(4) | $111,600 was previously paid in connection with a registration statement on Form F-10 (File No. 333-162129) filed by Fairfax Financial Holdings Limited on September 25, 2009, all of which was paid in relation to securities remaining unsold in the offering contemplated by such registration statement, which unsold securities were deregistered upon the filing of a post-effective amendment to such registration statement on March 4, 2010. Pursuant to Rule 457(p) under the Securities Act of 1933, as amended, such amount is being offset against the filing fee due in connection with the filing of this registration statement. Accordingly, $31,000 is being paid at the time of filing this registration statement. |
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This short form base shelf prospectus has been filed under legislation in each of the provinces and territories of Canada that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.
Preferred Shares
Debt Securities
Subscription Receipts
Warrants
Share Purchase Contracts
Units
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PRESENTATION OF OUR FINANCIAL INFORMATION | 3 | |||
EXCHANGE RATE DATA | 4 | |||
FORWARD-LOOKING STATEMENTS | 4 | |||
THE COMPANY | 6 | |||
RISK FACTORS | 8 | |||
USE OF PROCEEDS | 21 | |||
INSURANCE REGULATORY MATTERS | 21 | |||
DESCRIPTION OF DEBT SECURITIES | 30 | |||
DESCRIPTION OF SUBORDINATE VOTING SHARES AND PREFERRED SHARES | 43 | |||
DESCRIPTION OF SUBSCRIPTION RECEIPTS | 48 | |||
DESCRIPTION OF WARRANTS | 49 | |||
DESCRIPTION OF SHARE PURCHASE CONTRACTS | 51 | |||
DESCRIPTION OF UNITS | 52 | |||
PLAN OF DISTRIBUTION | 53 | |||
CAPITALIZATION | 54 | |||
EARNINGS COVERAGE RATIOS | 55 | |||
CERTAIN INCOME TAX CONSIDERATIONS | 56 | |||
DOCUMENTS INCORPORATED BY REFERENCE | 56 | |||
LEGAL MATTERS | 58 | |||
EXPERTS | 58 | |||
AUDITORS, TRANSFER AGENT AND REGISTRAR | 58 | |||
LIST OF DOCUMENTS FILED WITH THE SEC | 58 |
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Nine Months | ||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||
Low | 0.7872 | 0.8528 | 0.8437 | 0.7711 | 0.7692 | 0.7692 | 0.9278 | |||||||||||||||||||||
High | 0.8690 | 0.9099 | 1.0905 | 1.0289 | 0.9716 | 0.9422 | 1.0039 | |||||||||||||||||||||
Period End | 0.8577 | 0.8581 | 1.0120 | 0.8166 | 0.9555 | 0.9327 | 0.9711 | |||||||||||||||||||||
Average | 0.8259 | 0.8820 | 0.9348 | 0.9441 | 0.8757 | 0.8546 | 0.9656 |
• | a reduction in net income 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; | ||
• | 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; | ||
• | 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 our use of derivative instruments; | ||
• | the failure of our hedging methods to achieve their desired risk management objective; | ||
• | 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; |
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• | 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; | ||
• | the inability of our subsidiaries to maintain financial or claims paying ability ratings; | ||
• | a decrease in the level of demand for reinsurance or insurance products, or increased competition in the insurance industry; | ||
• | the failure of any of the loss limitation methods we employ; | ||
• | the impact of emerging claim and coverage issues; | ||
• | our inability to obtain reinsurance coverage in sufficient amounts, at reasonable prices or on terms that adequately protect us; | ||
• | our inability to access our subsidiaries’ cash; | ||
• | our inability to obtain required levels of capital on favorable terms, if at all; | ||
• | loss of key employees; | ||
• | 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 related to, insurance industry practices; | ||
• | risks associated with political and other developments in foreign jurisdictions in which we operate; | ||
• | risks associated with the current purported class action litigation; | ||
• | risks associated with our pending civil litigation; | ||
• | 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 future income tax assets; | ||
• | assessments and shared market mechanisms which may adversely affect our U.S. insurance subsidiaries; and | ||
• | failures or security breaches of our computer and data processing systems. |
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• | the extent of coverage under insurance policies; | ||
• | whether or not particular claims are subject to an aggregate limit; | ||
• | whether multiple policies issued to the same insured will be triggered by a particular claim; | ||
• | the number of occurrences involved in particular claims; and | ||
• | new theories of insured and insurer liability. |
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• | continuing changes in the litigation climate surrounding asbestos claims, including tort reform efforts in various jurisdictions; | ||
• | increases in the number and size of claims relating to construction defects, which often present complex coverage and damage valuation questions; |
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• | changes in interpretation of the named insured provision with respect to the uninsured/underinsured motorist coverage in commercial automobile policies; | ||
• | breakthroughs in health care technology, which often lead to increasingly expensive treatments affecting workers compensation exposures; and | ||
• | a growing trend in the United States of plaintiffs targeting property and casualty insurers in purported class action litigation relating to claim-handling, premium calculation and billing, and other practices, particularly with respect to the handling of personal lines automobile and homeowners claims. |
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Property and Casualty Insurance Compensation Corporation (“PACICC”) |
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• | the title of the debt securities; | ||
• | any limit upon the aggregate principal amount of the debt securities that may be authenticated and delivered under the indenture; | ||
• | the date or dates on which the principal of the debt securities is payable; | ||
• | the rate or rates at which the debt securities will bear interest, if any, the date or dates from which interest will accrue and the dates on which interest will be payable; | ||
• | the basis upon which interest will be calculated if other than on the basis of a 360-day year of twelve 30-day months; |
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• | the place or places, if any, other than or in addition to the City of New York, where the principal of (and premium, if any) and any interest on debt securities will be payable, any debt securities may be surrendered for registration of transfer, debt securities may be surrendered for exchange and the place or places where notices or demands to or upon us in respect of the debt securities may be served; | ||
• | whether we have the option to redeem the debt securities, whether in whole or in part, and the period or periods within which, the price or prices at which, the currency in which, and other terms and conditions upon which debt securities may be redeemed; | ||
• | whether we have the obligation, if any, to redeem, repay or purchase the debt securities pursuant to any sinking fund or analogous provision or at the option of a holder of debt securities, and the period or periods within which, the price or prices at which, the currency in which, and other terms and conditions upon which debt securities will be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; | ||
• | if other than denominations of Cdn$1,000 and any integral multiple thereof, the denominations in which any debt securities will be issuable; | ||
• | if other than us or one of the trustees, the identity of each registrar and/or paying agent; | ||
• | if other than the principal amount, the portion of the principal amount of debt securities that will be payable upon declaration of acceleration; | ||
• | if other than Canadian dollars, the currency in which payment of the principal of, and premium, if any, or interest, if any, on the debt securities will be payable or in which the debt securities will be denominated; | ||
• | whether the amount of payments of principal of, and premium, if any, or interest on the debt securities may be determined with reference to a formula or other method, and the manner in which such amounts will be determined; | ||
• | whether the principal of, and premium, if any, and interest, if any, on the debt securities are to be payable, at our election or at the election of a holder, in a currency other than that in which such debt securities are denominated or stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made, and the time and manner of determining the exchange rate between the currency in which such debt securities are denominated or stated to be payable and the currency in which such debt securities are to be so payable; | ||
• | the designation of the initial exchange rate agent, if any; | ||
• | any provisions limiting the applicability of, in modification of, in addition to or in lieu of the defeasance provisions of the indenture that will be applicable to the debt securities; | ||
• | provisions, if any, granting special rights to the holders of debt securities upon the occurrence of such events as may be specified; | ||
• | any deletions from, modifications of or additions to the events of default or covenants with respect to debt securities, whether or not such events of default or covenants are consistent with the events of default or covenants in the indenture; | ||
• | whether any debt securities are to be issuable in global form and, if so, whether beneficial owners of interests in any such global security may exchange such interests for debt securities of such series and of like tenor of any authorized form and denomination and the circumstances under which any such exchanges may occur; | ||
• | the person to whom any interest on any security will be payable, if other than the person in whose name that security is registered at the close of business on the record date for such interest; |
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• | if debt securities are to be issuable in definitive form, whether upon original issue or upon exchange of a temporary security of such series, only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and/or terms of such certificates, documents or conditions; | ||
• | any other terms, conditions, rights and preferences, or limitations on such rights and preferences, such as the subordination of the debt securities to our senior debt; and | ||
• | any other terms specific to the debt securities offered, including whether the debt securities will be senior debt securities or subordinated debt securities. |
• | only in fully registered certificated form; and | ||
• | unless we indicate otherwise in the applicable prospectus supplement, in denominations of Cdn$1,000 and amounts that are multiples of Cdn$1,000. |
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• | We do not pay the principal of, or any premium on, the debt security on its due date. | ||
• | We do not pay interest on the debt security within 30 days of its due date. |
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• | We do not deposit any sinking fund payment, if applicable, with respect to the debt securities on its due date. | ||
• | We remain in breach of a covenant or warranty (other than any payment covenant or a covenant or warranty included solely for the benefit of a different series of debt securities) in the indenture for 60 days after we receive a written notice of default stating that we are in breach. The notice must be sent by either of the trustees or the holders of at least 25% of the principal amount of the debt securities of the affected series. | ||
• | We default in the payment, at the stated maturity, of any of our indebtedness for borrowed money in excess of $10 million, or such indebtedness is accelerated, if such indebtedness has not been discharged, or such acceleration has not been rescinded or annulled, within 10 days after written notice has been given by either trustee, or the holders of at least 25% of the principal amount of all of the outstanding debt securities. | ||
• | We file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur. | ||
• | Any other Event of Default that may be described in the applicable prospectus supplement, and set forth in the applicable supplemental indenture, occurs. |
• | The holder must give the trustee written notice that an Event of Default has occurred and remains uncured. | ||
• | The holders of 25% in principal amount of all outstanding debt securities of the relevant series or, in some cases, of all series must make a written request that the trustee take action because of the default that has occurred and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action. |
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• | The trustee must not have taken any action for 60 days after receipt of the above notice, request and offer of indemnity. | ||
• | The holders of a majority in principal amount of the debt securities of the relevant series or, in some cases, of all series must not have given the trustee a direction inconsistent with the above notice or request. |
• | the payment of principal, or any premium or interest, on the affected series of debt securities; or | ||
• | a default in respect of a covenant that cannot be modified or amended without the consent of each holder of the affected series of debt securities. |
• | in the event that, as a result of the transaction, we are not the surviving entity or we convey, transfer or lease all or substantially all of our assets, the surviving entity must be a corporation, partnership or trust organized under the laws of a jurisdiction in Canada or the United States and such entity must agree to be legally responsible for the debt securities; and | ||
• | after giving effect to the transaction, no Event of Default shall have occurred or be continuing. |
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• | evidence the succession of another person to our obligations; | ||
• | add covenants for the benefit of the holders of all or any series of debt securities or to surrender any right or power conferred to us in the indenture; | ||
• | add any additional Events of Default; | ||
• | add to or change any of the provisions of the indenture to the extent necessary to permit or facilitate the issuance of debt securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to provide for uncertificated debt securities, in compliance with applicable laws and regulations; | ||
• | change or eliminate any of the provisions of the indenture;providedthat any such change or elimination shall become effective only when there are no debt securities outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; | ||
• | secure the debt securities pursuant to the requirements of the covenant described under “Limitation on Liens of Capital Stock of Restricted Subsidiaries”; | ||
• | establish the form or terms of securities of any series as permitted by the indenture; | ||
• | evidence and provide for the acceptance of appointment of a successor trustee with respect to the debt securities of one or more series and to add to or change any of the provisions of the indenture as is necessary to provide for or facilitate the administration of any trusts established under the indenture by more than two trustees; | ||
• | close the indenture with respect to the authentication and delivery of additional series of debt securities, to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under the indenture;providedthat any such action will not adversely affect the interests of the holders of debt securities of any series in any material respect; or | ||
• | supplement any of the provisions of the indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of debt securities;providedthat any such action will not adversely affect the interests of the holders of debt securities of such series or any other series of debt securities in any material respect. |
• | change the stated maturity of the principal of, or interest on, your debt securities; | ||
• | reduce the principal amount of, or premium, if any, or interest on, your debt securities; |
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• | reduce the amount of principal payable upon acceleration of maturity of your debt securities; | ||
• | make any change that adversely affects any right of repayment at your option; | ||
• | change the place or currency of payment on your debt securities; | ||
• | impair your right to sue for payment on your debt securities; | ||
• | reduce the percentage of holders of outstanding debt securities of your series or of all series whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults of the indenture; or | ||
• | modify any of the provisions of the indenture dealing with modification, waiver of past defaults or the waiver of certain covenants relating to your debt securities except to increase the percentage of holders of the debt securities required to approve certain matters or to require all holders of debt securities to approve certain matters. |
• | If the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of the outstanding debt securities of that series. | ||
• | If the change affects more than one series of debt securities issued under the indenture, it must be approved by the holders of a majority in principal amount of the outstanding debt securities of all series affected by the change, with all affected series voting together as one class for this purpose. | ||
• | Waiver of our compliance with certain provisions of the indenture must be approved by the holders of a majority in principal amount of the outstanding debt securities of all series issued under the indenture, voting together as one class for this purpose, in accordance with the terms of the indenture. |
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• | to be released from some of the covenants in the indenture under which your debt securities were issued (referred to as “covenant defeasance”); or | ||
• | to be discharged from all of our obligations with respect to your debt securities, except for obligations to register the transfer or exchange of your debt securities, to replace mutilated, destroyed, lost or stolen debt securities, to maintain paying offices or agencies and to hold moneys for payment in trust (referred to as “full defeasance”). |
• | We must deposit in trust for the benefit of all holders of the debt securities of the same series as your debt securities a combination of money and government obligations issued in the currency in which the debt securities of the applicable series are payable, that would generate enough cash to make interest, principal and any other payments on such series of debt securities on the various dates when such payments would be due. | ||
• | No Event of Default or event which with notice or lapse of time or both would become an Event of Default, including by reason of the above deposit of money, notes or bonds, with respect to your debt securities shall have occurred and be continuing on the date of such deposit or at any time during the three-month period after such a deposit in respect of certain bankruptcy or insolvency events. | ||
• | We must not be insolvent on the date of the deposit of the funds or at any time during the three-month period after the date of such deposit. | ||
• | No breach or violation of any covenant under the indenture shall occur as a result of such deposit. | ||
• | We must deliver to the trustees of your debt securities a legal opinion of our counsel to the effect that, for U.S. federal income tax purposes and Canadian federal or provincial income tax or other tax purposes, you will not recognize income, gain or loss as a result of such covenant defeasance and that such covenant defeasance will not cause you to be taxed on your debt securities any differently than if such covenant defeasance had not occurred. | ||
• | We must deliver to the trustees of your debt securities an officer’s certificate and a legal opinion of our counsel stating that all conditions precedent to covenant defeasance, as set forth in the indenture, had been complied with. | ||
• | We must comply with certain additional terms of, conditions to or limitations to covenant defeasance, as set forth in the indenture. |
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• | We must deposit in trust for the benefit of all holders of the debt securities of the same series as your debt securities a combination of money and government obligations issued in the currency in which the debt securities of the applicable series are payable, that would generate enough cash to make interest, principal and any other payments on such series of debt securities on the various dates when such payments would be due. | ||
• | No Event of Default or event which with notice or lapse of time or both would become an Event of Default, including by reason of the above deposit of money, notes or bonds, with respect to your debt securities shall have occurred and be continuing on the date of such deposit or at any time during the three-month period after such a deposit in respect of certain bankruptcy or insolvency events. | ||
• | We must not be insolvent on the date of the deposit of the funds or at any time during the three-month period after the date of such deposit. | ||
• | No breach or violation of any covenant under the indenture shall occur as a result of such deposit. | ||
• | We must deliver to the trustees of such debt securities a legal opinion of our counsel stating either that we have received, or there has been published, a ruling by the Internal Revenue Service or that there had been a change in the applicable U.S. federal income tax law, in either case to the effect that, for U.S. federal income tax purposes, you will not recognize income, gain or loss as a result of such full defeasance and that such full defeasance will not cause you to be taxed on your debt securities any differently than if such full defeasance had not occurred and we had just repaid your debt securities ourselves at maturity. | ||
• | We must deliver to the trustees of your debt securities a legal opinion of our counsel to the effect that, for Canadian federal or provincial income tax purposes or other tax purposes, you will not recognize income, gain or loss as a result of such defeasance and that such defeasance will not cause you to be taxed on your debt securities any differently than if such defeasance had not occurred. | ||
• | We must deliver to the trustees of your debt securities an officer’s certificate and a legal opinion of our counsel stating that all conditions precedent to full defeasance, as set forth in the indenture, had been complied with. | ||
• | We must comply with certain additional terms of, conditions to or limitations to full defeasance, as set forth in the indenture. |
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• | how it handles securities payments and notices; | ||
• | whether it imposes fees or charges; | ||
• | how it would handle a request for its consent, as a legal holder of the debt securities, if ever required; | ||
• | if permitted for a particular series of debt securities, whether and how you can instruct it to send you debt securities registered in your own name so you can be a legal holder of such debt securities; | ||
• | how it would exercise rights under the debt securities if there were a default or other event triggering the need for holders to act to protect their interests; and | ||
• | if the debt securities are in book-entry form, how the depositary’s rules and procedures will affect these matters. |
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(i) | the number of the Multiple Voting Shares held by Sixty Two (and its 75% owned subsidiaries, of which there are currently none) falls below 1,197,480 shares, unless this results from a sale of shares to purchasers who make an equivalent unconditional offer to purchase all outstanding Subordinate Voting Shares; or | ||
(ii) | the number of the Multiple Voting Shares held by purchasers referred to in (i) above (and their 75% owned subsidiaries) falls below 1,197,480. |
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• | the offering price at which we will issue the preferred shares; | ||
• | the title and designation of number of shares of the series of preferred shares; | ||
• | the dividend rate or method of calculation, the payment dates for dividends and the place or places where the dividends will be paid, whether dividends will be cumulative or noncumulative, and, if cumulative, the dates from which dividends will begin to accumulate; | ||
• | any conversion or exchange rights; | ||
• | whether the preferred shares will be subject to redemption and the redemption price and other terms and conditions relative to the redemption rights; | ||
• | any liquidation rights; | ||
• | any sinking fund provisions; | ||
• | any voting rights; and | ||
• | any other rights, preferences, privileges, limitations and restrictions that are not inconsistent with the terms of our articles of incorporation. |
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(i) | the number of subscription receipts; | ||
(ii) | the price at which the subscription receipts will be offered and whether the price is payable in instalments; | ||
(iii) | any conditions to the exchange of subscription receipts into debt securities, preferred shares or common shares, as the case may be, and the consequences of such conditions not being satisfied; | ||
(iv) | the procedures for the exchange of the subscription receipts into debt securities, preferred shares or common shares, as the case may be; | ||
(v) | the number of debt securities, preferred shares or common shares, as the case may be, that may be exchanged upon exercise of each subscription receipt; | ||
(vi) | the designation and terms of any other securities with which the subscription receipts will be offered, if any, and the number of subscription receipts that will be offered with each security; | ||
(vii) | the dates or periods during which the subscription receipts may be exchanged into debt securities, preferred shares or common shares; | ||
(viii) | whether such subscription receipts will be listed on any securities exchange; | ||
(ix) | any other rights, privileges, restrictions and conditions attaching to the subscription receipts; and | ||
(x) | any other specific terms. |
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• | the title of such debt warrants; | ||
• | the offering price for such debt warrants, if any; | ||
• | the aggregate number of such debt warrants; | ||
• | the designation and terms of the debt securities purchasable upon exercise of such debt warrants; | ||
• | if applicable, the designation and terms of the debt securities with which such debt warrants are issued and the number of such debt warrants issued with each such debt security; | ||
• | if applicable, the date from and after which such debt warrants and any debt securities issued therewith will be separately transferable; | ||
• | the principal amount of debt securities purchasable upon exercise of a debt warrant and the price at which such principal amount of debt securities may be purchased upon exercise (and whether such price may be payable in cash, securities, or other property); | ||
• | the date on which the right to exercise such debt warrants shall commence and the date on which such right shall expire; | ||
• | if applicable, the minimum or maximum amount of such debt warrants that may be exercised at any one time; | ||
• | whether the debt warrants represented by the debt warrant certificates or debt securities that may be issued upon exercise of the debt warrants will be issued in registered or bearer form; | ||
• | information with respect to book-entry procedures, if any; | ||
• | the currency or currency units in which the offering price, if any, and the exercise price are payable; | ||
• | if applicable, a discussion of principal Canadian federal income tax considerations; | ||
• | the antidilution or adjustment provisions of such debt warrants, if any; | ||
• | the redemption or call provisions, if any, applicable to such debt warrants; and | ||
• | any additional terms of such debt warrants, including terms, procedures, and limitations relating to the exchange and exercise of such debt warrants. |
• | the title of such warrants; | ||
• | the offering price for such warrants, if any; | ||
• | the aggregate number of such warrants; |
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• | the designation and terms of the Subordinate Voting Share or series of preferred shares purchasable upon exercise of such warrants; | ||
• | if applicable, the designation and terms of the offered securities with which such warrants are issued and the number of such warrants issued with each such offered security; | ||
• | if applicable, the date from and after which such warrants and any offered securities issued therewith will be separately transferable; | ||
• | the number of Subordinate Voting Share or preferred shares purchasable upon exercise of a warrant and the price at which such shares may be purchased upon exercise; | ||
• | the date on which the right to exercise such warrants shall commence and the date on which such right shall expire; | ||
• | if applicable, the minimum or maximum amount of such warrants that may be exercised at any one time; | ||
• | the currency or currency units in which the offering price, if any, and the exercise price are payable; | ||
• | if applicable, a discussion of principal United States and Canadian federal income tax considerations; | ||
• | the antidilution provisions of such warrants, if any; | ||
• | the redemption or call provisions, if any, applicable to such warrants; and | ||
• | any additional terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants. |
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• | whether the share purchase contracts obligate the holder to purchase or sell, or both purchase and sell, our Subordinate Voting Shares or preferred shares, as applicable, and the nature and amount of each of those securities, or the method of determining those amounts; | ||
• | whether the share purchase contracts are to be prepaid or not; | ||
• | whether the share purchase contracts are to be settled by delivery, or by reference or linkage to the value or performance of our Subordinate Voting Shares or preferred shares; | ||
• | any acceleration, cancellation, termination or other provisions relating to the settlement of the share purchase contracts; | ||
• | whether the share purchase contracts will be issued in fully registered or global form; and | ||
• | whether the share purchase contracts constitute derivatives or hybrid products as defined under Section 3 of theDerivatives Act(Québec) or whether they constitute securities within the meaning of theSecurities Act(Québec), and to which of these two statutes the share purchase contracts are subject. |
• | the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
52
• | any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and | ||
• | whether the units will be issued in fully registered or global form. |
• | to or through underwriters, dealers, placement agents or other intermediaries, or | ||
• | directly to one or more purchasers, provided that the registration requirements of applicable provincial and territorial securities laws are not applicable to the transaction. |
• | the name or names of any underwriters, dealers or other placement agents, | ||
• | the purchase price of, and form of consideration for, the securities and the proceeds, if any, to us from such sale or exchange, | ||
• | any delayed delivery arrangements, | ||
• | any underwriting discounts and other items constituting underwriters’ compensation, | ||
• | any offering price, and | ||
• | any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which the securities may be listed. |
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As of September 30, 2010 | ||||||||
Actual | As Adjusted | |||||||
(U.S. dollars, in millions) | ||||||||
Holding company cash, short-term investments and marketable securities, net of short sale and derivative obligations | $ | 1,266.5 | $ | 1,538.3 | ||||
Debt(1) | ||||||||
Subsidiary indebtedness(2) | $ | 80.7 | $ | 10.1 | ||||
Long-term debt — holding company borrowings | 1,475.8 | 1,475.8 | ||||||
Long-term debt — subsidiary company borrowings | 917.4 | 917.4 | ||||||
TIG Note | 140.2 | 140.2 | ||||||
Purchase consideration payable | 160.0 | 160.0 | ||||||
Trust preferred securities of subsidiaries | 9.1 | 9.1 | ||||||
Total debt | 2,783.2 | 2,712.6 | ||||||
Equity | ||||||||
Common stock | 3,257.2 | 3,252.7 | ||||||
Treasury stock, at cost | (52.1 | ) | (52.6 | ) | ||||
Share-based compensation | 0.4 | 0.4 | ||||||
Retained earnings | 4,081.5 | 4,071.9 | ||||||
Accumulated other comprehensive income | 936.9 | 936.9 | ||||||
Common shareholders’ equity | 8,223.9 | 8,209.3 | ||||||
Preferred stock | 646.2 | 934.7 | ||||||
Non-controlling interests(3) | 44.4 | 44.4 | ||||||
Total equity | 8,914.5 | 9,188.4 | ||||||
Total capitalization | $ | 11,697.7 | $ | 11,901.0 | ||||
Total debt as a percentage of total capitalization | 23.8 | % | 22.8 | % | ||||
Net debt as a percentage of net total capitalization(4) | 14.5 | % | 11.3 | % |
(1) | See notes 9 and 10 of our audited consolidated financial statements for the year ended December 31, 2009 and note 6 to our unaudited interim consolidated financial statements for the nine months ended September 30, 2010, incorporated by reference in this prospectus, for more details on our long-term debt, purchase consideration payable, the TIG Note and trust preferred securities. | |
(2) | The “As Adjusted” subsidiary indebtedness reflects $43.6 million paid by OdysseyRe on October 20, 2010 to repurchase $42.4 million of the stated capital of its Series A preferred shares and $27.0 million paid to repurchase $26.1 million of the stated capital of its Series B preferred shares. | |
(3) | Includes minority interest in Ridley Inc. and First Capital Insurance Limited. |
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(4) | Net debt equals total debt minus cash, short-term investments and marketable securities, net of short sale and derivative obligations. Net total capitalization is calculated by the Company as the sum of the total equity and net debt. |
• | the issuance of 12,000,000 Series I Shares on October 5, 2010 with an aggregate stated capital of Cdn$300 million; and | ||
• | the redemption on October 20, 2010 of OdysseyRe’s $42.4 million of stated capital of Series A preferred shares and $26.1 million of stated capital of Series B preferred shares. |
• | the issuance of 8,000,000 Series E Shares on February 1, 2010 with an aggregate stated capital of Cdn$200 million; | ||
• | the acquisition of Zenith on May 20, 2010 which included the consolidation of $45.5 million aggregate principal amount of Zenith’s redeemable securities and the deconsolidation of $38.0 million and $6.2 million of long-term debt — holding company borrowings and long-term debt — subsidiary company borrowings respectively, as a result of Zenith owning notes of Fairfax and OdysseyRe in its investment portfolio prior to its acquisition by Fairfax; | ||
• | the issuance on June 22, 2010 of Cdn$275 million principal amount of 7.25% Senior Notes due 2020; | ||
• | the issuance of 10,000,000 Series G Shares on July 28, 2010 with an aggregate stated capital of Cdn$250 million; | ||
• | the issuance of a non-interest bearing contingent promissory note by TIG Insurance Company, an indirect wholly-owned subsidiary of Fairfax, on August 17, 2010 with an acquisition date fair value of $140.2 million in connection with the acquisition of General Fidelity Insurance Company; | ||
• | the repurchase on September 24, 2010 of $7.0 million aggregate principal amount of Zenith’s redeemable securities; | ||
• | the issuance of 12,000,000 Series I Shares on October 5, 2010 with an aggregate stated capital of Cdn$300 million; and | ||
• | the redemption on October 20, 2010 of OdysseyRe’s $42.4 million of stated capital of Series A preferred shares and $26.1 million of stated capital of Series B preferred shares. |
Twelve Months Ended | ||||||||||||||||
September 30, 2010 | December 31, 2009 | |||||||||||||||
Actual | As Adjusted | Actual | As Adjusted | |||||||||||||
Earnings coverage(1) | 5.5 | 5.3 | 7.7 | 5.5 |
(1) | Earnings coverage is equal to net income before interest expense, non-controlling interests and income taxes divided by consolidated interest expense and preferred share dividend distributions adjusted to a before tax equivalent at the Company’s effective tax rate. |
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1. | our annual information form for the year ended December 31, 2009, dated March 5, 2010; | |
2. | our audited consolidated financial statements and the notes thereto, including balance sheets as at December 31, 2009 and 2008 and statements of earnings, comprehensive income, shareholders’ equity and cash flows for each of the years in the three year period ended December 31, 2009 and including management’s report on internal control over financial reporting set out on page 16 of our 2009 Annual Report, together with the report of the auditors on these consolidated financial statements and on the effectiveness of internal control over financial reporting; | |
3. | management’s discussion and analysis for the annual consolidated financial statements as at and for the periods referred to in paragraph 2; | |
4. | our management information circular dated March 5, 2010 in connection with the annual meeting of shareholders held on April 22, 2010; | |
5. | our unaudited consolidated financial statements and the notes thereto, including balance sheets as at September 30, 2010 and statements of earnings, comprehensive income, shareholders’ equity and cash flows for the nine months ended September 30, 2010 and September 30, 2009; | |
6. | management’s discussion and analysis for the unaudited consolidated financial statements as at and for the periods referred to in paragraph 5; and |
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7. | our material change report dated February 22, 2010 relating to our acquisition of Zenith. |
57
58
II-1
III-1
FAIRFAX FINANCIAL HOLDINGS LIMITED | ||||
By: | /s/ Bradley P. Martin | |||
Bradley P. Martin | ||||
Vice President, Chief Operating Officer and Corporate Secretary |
III-2
Signature | Title | Date | ||
/s/ V. Prem Watsa | Chairman, Chief Executive Officer and Director | December 10, 2010 | ||
V. Prem Watsa | (Principal Executive Officer) | |||
/s/ John Varnell | Vice President and Chief Financial Officer | December 10, 2010 | ||
John Varnell | (Principal Financial Officer) | |||
/s/ David Bonham | Vice President, Financial Reporting | December 10, 2010 | ||
David Bonham | (Principal Accounting Officer) | |||
Director | ||||
Robert J. Gunn | ||||
/s/ Anthony F. Griffiths | Director | December 10, 2010 | ||
Anthony F. Griffiths | ||||
Director | ||||
Brandon W. Sweitzer | ||||
/s/ Alan D. Horn | Director | December 10, 2010 | ||
Alan D. Horn | ||||
/s/ Timothy R. Price | Director | December 10, 2010 | ||
Timothy R. Price |
III-3
FAIRFAX INC. | ||||
By: | /s/ Bradley P. Martin | |||
Name: | Bradley P. Martin | |||
Title: | Corporate Secretary |
III-4
Exhibit | ||
Number | Description | |
4.1 | The Registrant’s annual information form for the year ended December 31, 2009, dated March 5, 2010 (incorporated by reference to the Registrant’s Annual Report on Form 40-F filed on March 5, 2010). | |
4.2 | The Registrant’s audited consolidated financial statements and the notes thereto, including balance sheets as at December 31, 2009 and 2008 and statements of earnings, comprehensive income, shareholders’ equity and cash flows for each of the years in the three year period ended December 31, 2009 and including management’s report on internal control over financial reporting set out on p. 16 of the Registrant’s 2009 Annual Report, together with the report of the auditors on these consolidated financial statements and on the effectiveness of internal control over financial reporting (incorporated by reference to the Registrant’s 2009 Annual Report included in the Current Report on Form 6-K furnished on March 5, 2010). | |
4.3 | The Registrant’s management’s discussion and analysis for the annual consolidated financial statements as at December 31, 2009 and 2008 and for each of the years in the three year period ended December 31, 2009 (incorporated by reference to the Registrant’s 2009 Annual Report included in the Current Report on Form 6-K furnished on March 5, 2010). | |
4.4 | The Registrant’s comparative unaudited financial statements for the nine-month period ended September 30, 2010 (incorporated by reference to the Current Report on Form 6-K filed on October 29, 2010). | |
4.5 | The Registrant’s interim Management’s Discussion and Analysis for the nine-month period ended September 30, 2010 (incorporated by reference to the Current Report on Form 6-K filed on October 29, 2010). | |
4.6 | The Registrant’s management proxy circular dated March 5, 2010 in connection with the annual meeting of shareholders held on April 22, 2010 (incorporated by reference to the Current Report on Form 6-K furnished on March 5, 2010). | |
4.7(*) | The Registrant’s material change report dated February 22, 2010 relating to the Registrant’s acquisition of Zenith National Insurance Corp. | |
5.1(*) | Consent of PricewaterhouseCoopers LLP. | |
5.2(*) | Consent of Torys LLP. | |
6.1 | Powers of Attorney (contained on the signature page of this Registration Statement). | |
7.1 | Indenture dated as of December 1, 1993 among the Registrant, The Bank of New York Mellon (as successor to Bank of Montreal Trust Company) and CIBC Mellon Trust Company (formerly known as The R-M Trust Company) (incorporated by reference to Registration Statement 333-150459 filed on April 25, 2008). | |
7.2(*) | Statement of Eligibility and Qualification of The Bank of New York Mellon on Form T-1. |
(*) | Filed herewith |
III-5