Canadian financial services holding company Fairfax has announced it will buy back up to 950,000 of its subordinate voting shares, accounting for approximately 10 percent of its currently outstanding subordinate voting shares.
The 22 September announcement follows Fairfax's repurchase of $60.3mn of outstanding Senior Notes maturing in 2005 and 2006, which in turn was partially financed by its issuance of $95mn of 7.75 percent Senior Notes due 2012.
As reported in the September 2004 edition of Insider Week's sister publication The Insurance Insider, Fairfax has divided opinion over the past year about its ongoing viability and liquidity.
The company, which holds stakes in US (re)insurer Odyssey Re, property and casualty insurer Northbridge Financial, New Jersey based commercial property and casualty insurer Crum & Forster, Lloyd's insurer Advent and the Kingsmead run-off syndicates, was criticised at the end of August by ratings agency Fitch for "a lack of adequate disclosures regarding certain entities and transactions that could affect parent company liquidity".
In the same month, Morgan Keegan analyst John D Gwynn published a research note that listed 13 "significant corporate events" over the past three years, including sales of shares, debt offerings and restructurings, which, he said, "aggregate over $900mn of net proceeds at the holding company level".
Despite this, he said, marketable securities balances at the holding company went from around $253.4mn at 30 June, 2001 to $262.7mn at 30 June 2002 while long term debt levels "exploded over the same time frame".