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PROSPECTUS SUPPLEMENT NO. 10
(To base shelf prospectus dated August 11, 2003) |
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Filed Pursuant to General
Instruction II.L. of Form F-10;
File No. 333-107361 |
Fairfax Financial Holdings Limited
US$200,000,000 Aggregate Principal Amount of
5% Convertible Senior Debentures Due 2023
Subordinate Voting Shares
This document supplements our base shelf prospectus dated
August 11, 2003, as supplemented October 6, 2003,
October 31, 2003, December 19, 2003, February 17,
2004, March 9, 2004, April 30, 2004, July 30,
2004, October 29, 2004 and February 10, 2005, relating
to the resale of up to US$200,000,000 aggregate principal amount
of debentures and the subordinate voting shares issuable upon
conversion, redemption, purchase or maturity thereof by certain
selling securityholders, each an Electing Holder, named in
Schedule A to this prospectus supplement.
You should read this prospectus supplement in conjunction with
the base shelf prospectus. This prospectus supplement updates
certain information in the base shelf prospectus and,
accordingly, to the extent inconsistent, the information in this
prospectus supplement supersedes the information contained in
the base shelf prospectus.
The debentures and the subordinate voting shares issuable upon
conversion, redemption, purchase or maturity thereof may be
offered in negotiated transactions or otherwise, at varying
prices determined at the time of the sale or at negotiated
prices. In addition, the subordinate voting shares may be
offered from time to time through ordinary brokerage
transactions on the New York Stock Exchange. See Plan of
Distribution in the base shelf prospectus.
Investing in the debentures and the subordinate voting shares
issuable upon their conversion involves risks.
See the Risk Factors section beginning on
page 2 of the base shelf prospectus.
We are permitted to prepare this prospectus supplement and
the base shelf prospectus in accordance with Canadian disclosure
requirements, which are different from those of the United
States. We prepare our financial statements in accordance with
Canadian generally accepted accounting principles, and are
subject to Canadian auditing and auditor independence standards.
As a result, they may be not be comparable to financial
statements of United States companies.
Owning debentures or subordinate voting shares may subject
you to tax consequences both in the United States and Canada.
This prospectus supplement may not describe these tax
consequences fully. You should read the tax discussion under
Certain Income Tax Considerations in the base shelf
prospectus.
Your ability to enforce civil liabilities under the United
States federal securities laws may be affected adversely because
we are incorporated in Canada, our officers and directors and
the experts named in the base shelf prospectus are Canadian
residents, and many of our assets are located outside the United
States.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE
BASE SHELF PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus supplement is April 13, 2005.
WHERE YOU CAN FIND MORE INFORMATION ABOUT FAIRFAX
The following documents, filed with the Ontario Securities
Commission (the OSC) under the Securities Act
(Ontario) are specifically incorporated by reference into and
form an integral part of the base shelf prospectus, as
supplemented, which we refer to as the prospectus:
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(a) |
our Renewal Annual Information Form for the year ended
December 31, 2004, dated March 31, 2005; |
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(b) |
our audited consolidated financial statements and the notes
thereto, including balance sheets as at December 31, 2004
and 2003 and earnings, retained earnings and cash flow
statements for each of the years in the three year period ended
December 31, 2004, together with the auditors report
thereon contained in our 2004 Annual Report; |
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(c) |
our Managements Discussion and Analysis for the annual
consolidated financial statements as at and for the periods
referred to in paragraph (b); and |
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(d) |
our management information circular dated March 4, 2005 in
connection with the annual meeting of shareholders held on
April 12, 2005, other than the sections entitled
Executive Compensation, Performance
Graph and Statement of Corporate Government
Practices. |
Any document of the type referred to in the preceding
paragraphs and material change reports (excluding confidential
material change reports) subsequently filed by us with the OSC
after the date of this prospectus supplement and prior to the
termination of the distribution of the debentures and
subordinate voting shares under this prospectus supplement shall
be deemed to be incorporated by reference in this prospectus.
Any statement contained in a document incorporated or deemed
to be incorporated by reference in this prospectus shall be
deemed to be modified or superseded, for the purposes of this
prospectus, to the extent that a statement contained herein or
therein, or any other subsequently filed document which also is
or is deemed to be incorporated by reference herein or therein,
modifies or supercedes that statement. The modifying or
superseding statement need not state that it has modified or
superseded a prior statement or include any other information
set forth in the document that it modifies or supersedes. The
making of a modifying or superseding statement shall not be
deemed an admission for any purposes that the modified or
superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an
omission to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light
of the circumstances in which it was made. Any statement so
modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this
prospectus.
Upon a new annual information form and new annual comparative
consolidated financial statements being filed by us with, and
where required, accepted by, the applicable securities
regulatory authorities during the currency of this prospectus,
the previous annual information form, the previous annual
comparative consolidated financial statements and the
accompanying managements discussion and analysis, all
interim consolidated financial statements and the accompanying
managements discussion and analysis, information circulars
and material change reports filed prior to the commencement of
our then current fiscal year in which our new annual information
form is filed, will be deemed no longer to be incorporated into
this prospectus for purposes of future offers and sales of the
securities under this prospectus. Upon interim consolidated
financial statements and the accompanying managements
discussion and analysis being filed by us with the applicable
securities regulatory authorities during the currency of this
prospectus, all interim consolidated financial statements and
the accompanying managements discussion and analysis filed
prior to the new interim consolidated financial statements will
be deemed no longer to be incorporated into this prospectus for
purposes of future offers and sales of securities under this
prospectus.
Information has been incorporated in this prospectus from
documents filed with the OSC. Copies of documents incorporated
herein or therein by reference may be obtained on request
without charge from Bradley P. Martin, Vice President and
Corporate Secretary of Fairfax, at Suite 800, 95 Wellington
Street
S-2
West, Toronto, Ontario, M5J 2N7. Copies of documents that
we have filed with the OSC may be obtained over the Internet at
the Canadian Securities Administrators website at
www.sedar.com.
We are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance
therewith file or furnish reports and other information with or
to the SEC. Our recent SEC filings may be obtained over the
Internet at the SECs website at www.sec.gov. You may also
read and copy any document we file or furnish with or to the SEC
at the public reference facilities maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549. Please call
1-800-SEC-0330 for further information on the operations of the
public reference facilities and copying charges.
EARNINGS COVERAGE RATIO
The following consolidated financial ratios are calculated for
the twelve months ended December 31, 2004. The As
Adjusted ratio for the twelve months ended
December 31, 2004 gives effect as of January 1, 2004
to:
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the repurchase, on January 14, 2005, of $7.0 million
aggregate principal amount of our
73/8%
senior notes due 2006; |
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the repurchase, on January 21, 2005, of $0.2 million
aggregate principal amount of our
67/8%
senior notes due 2008; and |
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the repurchase, on January 28, 2005, of $0.4 million
aggregate principal amount of our
67/8%
senior notes due 2008. |
Except as described above, the following table does not reflect
the interest cost of our debt and the debt of our subsidiaries
issued during the periods as if it was issued at the beginning
of the periods.
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Twelve Months Ended | |
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December 31, 2004 | |
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Actual | |
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As Adjusted | |
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Earnings coverage(1)
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1.8x |
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1.8x |
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(1) |
Earnings coverage is equal to net income (excluding unusual
items) before interest expense and income taxes divided by
interest expense on all debt. |
Our interest expense amounted to approximately
$164.6 million for the twelve-month period ended
December 31, 2004. Our earnings before interest expense,
income taxes and non-controlling interests for the twelve-month
period ended December 31, 2004 was approximately
$303.7 million, which is 1.8 times our interest
expense for the period.
After giving effect to each of the transactions described above
as if they had occurred at the beginning of the period, our
interest expense would have amounted to approximately
$164.0 million for the twelve-month period ended
December 31, 2004. After giving effect to each of the
transactions described above as if they had occurred at the
beginning of the period, our earnings before interest expense,
income taxes and non-controlling interests for the twelve-month
period ended December 31, 2004 would have been
approximately $303.3 million, which would have been
1.8 times our interest expense for the period.
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SCHEDULE A
ELECTING HOLDERS
The debentures originally were issued by us and sold by Banc of
America Securities LLC, Ferris, Baker Watts Incorporated and BNY
Capital Markets, Inc., as the initial purchasers, in
transactions exempt from the registration requirements of the
Securities Act of 1933, as amended, to persons reasonably
believed by the initial purchasers to be qualified institutional
buyers. The Electing Holders named below, including their
transferees, pledgees or donees or their successors, may from
time to time offer and sell any or all of the debentures and the
subordinate voting shares conversion, redemption, purchase or
maturity thereof pursuant to this prospectus supplement. The
Electing Holders may offer all, some or none of the debentures
and the subordinate voting shares issuable upon conversion,
redemption, purchase or maturity thereof.
The table below sets forth the name of each Electing Holder, the
principal amount of debentures that may be offered by each
Electing Holder under this prospectus and the number of
subordinate voting shares into which the debentures are
convertible upon conversion, redemption, purchase or maturity
thereof. The information is based on information provided to us
by or on behalf of the Electing Holders on or prior to
April 12, 2005. The Electing Holders identified below may
have sold, transferred or otherwise disposed of all or a portion
of their debentures or subordinate voting shares since the date
on which they provided this information in transactions exempt
from the registration requirements of the Securities Act of
1933, as amended. Information about the Electing Holders may
change from time to time. Any changed information will be set
forth in prospectus supplements or post-effective amendments, as
required.
Because the Electing Holders may offer all or some portion of
the debentures or the subordinate voting shares issuable upon
conversion, redemption, purchase or maturity thereof, we cannot
estimate the amount of debentures or subordinate voting shares
that may be held by the Electing Holders upon the conversion,
redemption, purchase or maturity thereof, upon completion of any
sales. For information on the procedure for sales by selling
securityholders, read the disclosure under the heading
Plan of Distribution in the base shelf prospectus.
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Principal Amount of |
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Number of Subordinate |
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Debentures Beneficially |
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Voting Shares Beneficially |
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Owned and |
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Owned Underlying the |
Name of Electing Holder |
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Offered Hereby* |
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Debentures** |
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Amaranth L.L.C.
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US$ |
63,050,000 |
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296,694 |
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Argent Classic Convertible Arbitrage Fund (Bermuda) Ltd.
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2,000,000 |
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9,411 |
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Banc of America Securities LLC
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655,000 |
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3,082 |
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CQS Convertible & Quantitative Strategies Master Fund Limited
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12,500,000 |
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58,821 |
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D.E. Shaw Investment Group, L.P.
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400,000 |
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1,882 |
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D.E. Shaw Valence Portfolios, L.P.
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1,600,000 |
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7,529 |
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DBAG London
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18,750,000 |
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88,231 |
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Deephaven Domestic Convertible Trading Ltd.
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3,933,000 |
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18,507 |
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Jersey (IMA) Ltd.
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2,500,000 |
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11,764 |
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LibertyView Credit Opportunities Fund L.P.
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3,000,000 |
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14,117 |
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LibertyView Funds L.P.
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5,500,000 |
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25,881 |
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Marathon Global Convertible Master Fund Ltd.
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18,000,000 |
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84,702 |
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MLQA Convertible Securities Arbitrage
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2,500,000 |
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11,764 |
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Sphinx Convertible Arbitrage Fund SPC
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67,000 |
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315 |
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Sunrise Partners Limited Partnership
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8,450,000 |
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39,763 |
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UBS AG F/B/O IPB Client
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2,000,000 |
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9,411 |
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Zazove Convertible Arbitrage Fund, L.P.
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2,000,000 |
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9,411 |
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Zenith Insurance Company***
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10,000,000 |
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47,057 |
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Total
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US$ |
156,905,000 |
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738,342 |
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* |
This includes all of the debentures beneficially owned by the
Electing Holders. |
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Assumes conversion of all of the Electing Holders
debentures at the initial conversion ratio of
4.7057 subordinate voting shares per US$1,000 principal
amount of debentures and a cash payment in lieu of fractional
shares. The conversion ratio is subject to adjustment as
described under Description of the Debentures
Conversion Rights Conversion Rate Adjustments
in the base shelf prospectus. As a result, the number of
subordinate voting shares may increase or decrease in the future. |
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*** |
In addition, Zenith Insurance Company owns 9,000 of our
Subordinate Voting Shares, which represents less than 0.1% of
the Subordinate Voting Shares outstanding. |
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