PrefBlog

Fairfax Financial Holdings Limited has announced:

that it has determined the fixed dividend rate on its Cumulative 5-Year Rate Reset Preferred Shares, Series K (“Series K Shares”) (TSX: FFH.PR.K) for the five years commencing April 1, 2022 and ending March 31, 2027. The fixed quarterly dividends on the Series K Shares during that period, if and when declared, will be paid at an annual rate of 5.045% (C$0.315313 per share per quarter).

Holders of Series K Shares have the right, at their option, exercisable not later than 5:00 pm (Toronto time) on March 16, 2022, to convert all or part of their Series K Shares, on a one-for-one basis, into Cumulative Floating Rate Preferred Shares, Series L (“Series L Shares”), effective March 31, 2022. The quarterly floating rate dividends on the Series L Shares will be paid at an annual rate, calculated for each quarter, of 3.51% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate in respect of the April 1, 2022 to June 29, 2022 dividend period for the Series L Shares will be 1.01712% (4.12500% on an annualized basis) and the dividend for such dividend period, if and when declared, will be C$0.25428 per share, payable on June 29, 2022.

Holders of Series K Shares are not required to elect to convert all or any part of their Series K Shares into Series L Shares. Holders of the Series K Shares who do not elect to convert their shares by the conversion deadline will retain their Series K Shares and will receive the fixed-rate dividend as described above (subject to the automatic conversion features described below).

As provided in the share conditions of the Series K Shares, (i) if Fairfax determines that there would be fewer than 1,000,000 Series K Shares outstanding after March 31, 2022, all remaining Series K Shares will be automatically converted into Series L Shares on a one-for-one basis effective March 31, 2022; and (ii) if Fairfax determines that there would be fewer than 1,000,000 Series L Shares outstanding after March 31, 2022, no Series K Shares will be permitted to be converted into Series L Shares. There are currently 9,500,000 Series K Shares outstanding.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series L Shares effective upon conversion. Listing of the Series L Shares is subject to Fairfax fulfilling all the listing requirements of the TSX and, upon approval, the Series L Shares will be listed on the TSX under the trading symbol “FFH.PR.L”.

FFH.PR.K was issued as a FixedReset, 5.00%+351, that commenced trading 2012-3-21 after being announced 2012-3-12. In 2017 the issue reset to 4.671%; I recommended against conversion; and there was no conversion.

This entry was posted on Thursday, March 3rd, 2022 at 9:58 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.