Fairfax Financial invests $150M in Calgary investment company

By Staff | December 23, 2016 | Last updated on December 23, 2016
2 min read

Fresh off a $5-billion bid for insurer Allied World earlier this week, Fairfax Financial is now investing $150 million into a Calgary-based investment company, Mosaic Capital Corporation.

Fairfax has agreed to subscribe for $100 million worth of 6% senior preferred securities and $50 million worth of 5% seven-year term secured debentures. It’s also subscribing to common share purchase warrants entitling Fairfax to acquire up to 17,026,106 common shares of Mosaic at an exercise price of $8.81 per share for seven years. If Fairfax fully exercises its warrants, the firm would own approximately 66% of Mosaic’s common shares, based on the number of shares currently outstanding.

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Mosaic and Fairfax each have long-term, value-oriented investing styles. As part of the transaction, Mosaic and Fairfax have agreed to work together as preferred partners to share mid-market private equity opportunities.

Fairfax will have the right to nominate two directors to the board of Mosaic. Paul Rivett, President of Fairfax, will be appointed as a director of Mosaic at closing of the Fairfax financing, expected in late January 2017.

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Mosaic will use the proceeds of the Fairfax financing to:

  • redeem all outstanding preferred securities (TSX-V: M.PR.A) and Series A Shares at $10 per security (plus all accrued and unpaid interest);
  • retract the private yield securities pursuant to the mandatory retraction provisions of the private yield securities indenture at $1,000 per security;
  • provide a liquidity option for the holders of Mosaic’s outstanding convertible debentures (TSX-V:M.DB); and
  • repay all or part of Mosaic’s acquisition credit facility, and for general corporate purposes.
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The staff of Advisor.ca have been covering news for financial advisors since 1998.