Fairfax to sell stocks for Brit Acquisition to shield credit rating

Fairfax financial Holdings Ltd.’s Prem Watsa, who said this week that issuing stock became one among his last alternatives for financing the acquisition of Brit p.c, opted days later to sell shares and protect his organization’s credit score rating.

Watsa, Fairfax’s chairman and chief government officer, introduced Thursday that BMO Capital Markets is main a group of underwriters to shop for C$650 million ($520 million) in subordinate vote casting shares. to be able to assist fund the $1.88 billion takeover of Brit, a Lloyd’s of London insurer. The deal turned into announced Feb. 16.

On a Feb. 17 convention name, Watsa stated that he had “many options” for financing, along with providing debt and bringing in equity partners. Issuing new stock will be the closing choice, he stated. the next day, trendy & terrible’s decreased its outlook at the firm to terrible.

“The market has replied very favorably to the proposed acquisition,” Paul Rivett, president of Toronto-based Fairfax, said in an e-mailed assertion. “We felt it was crucial to act expeditiously with a inventory issue with the intention to fast react to recent score-agency moves.”

Watsa said earlier in the week that he would paintings to keep Fairfax’s credit score high-quality while seeking financing for the Brit deal. S&P, in issuing its terrible outlook on Fairfax, maintained a score of BBB-, the lowest of 10 funding-grade levels.

“The agency has numerous options for restoring capital adequacy,” in step with a Feb. 18 report from S&P. “there's execution danger with reference to any capital-control plan that it adopts.”

Watsa has been constructing Fairfax for decades, with bets on Irish banking, puppy insurance and Zenith country wide insurance Corp., the issuer of workers’ reimbursement insurance inside the U.S. He has stated the Brit deal might add income of policies to defend business customers against specific dangers.