Fairfax Announces Release of Crum & Forster Debt Issue Proceeds

July 1, 2003

Toronto’s Fairfax Financial Holdings Limited announced that the net proceeds of the recent US$300 million private debt issue by its wholly-owned subsidiary, Crum & Forster Holdings Corp., are being released from escrow, following negotiation between Fairfax and its “bank credit facility.”

“After issue expenses and establishing an escrow to fund the first four interest payments, over US$210 million of these proceeds will be distributed to Fairfax for use in purchasing or repaying outstanding indebtedness or to invest in cash, short term investments or marketable securities,” said the announcement.

The bank agreement, renegotiated by Fairfax, provides for a “syndicated facility with ten banks extending to December 31, 2005 and providing aggregate revolving credit facilities of $474 million, declining to $337 million on September 30, 2003 and to $269 million by September 30, 2004. There are $240 million of letters of credit outstanding under the facility.”

The facility is secured by Fairfax assets, including its shares of its holding company subsidiaries Northbridge Financial Corporation, Odyssey Re Holdings Corp. and Crum & Forster, and “contains various restrictive covenants including a maximum net debt to equity ratio of 0.9 to 1.”

The announcement indicated that the new “facility is more flexible than Fairfax’s current facility in that it allows for borrowing by Northbridge and Odyssey Re.” Fairfax also noted that it is “exploring the possibility of an additional bank facility specifically for the purpose of issuing letters of credit.”

Was this article valuable?

Here are more articles you may enjoy.