Fairfax Completes Cunningham Lindsey Deal with Stone Point

January 3, 2008

Fairfax Financial Holdings Limited and the Cunningham Lindsey Group Inc. announced that they have closed the previously announced sale transaction with Trident IV, L.P., a private equity fund, managed by Stone Point Capital LLC, and certain affiliated entities, collectively Stone Point (See IJ web site: https://www.insurancejournal.com/news/international/2007/11/01/84688.htm)

Pursuant to the agreement, Stone Point acquired, for approximately C$88 million (US$88.6 million), a 51 percent interest in a newly-formed holding company that owns the operating businesses of loss adjusters Cunningham Lindsey. Fairfax invested approximately C$35 million (US$35.24 million). Senior management of Cunningham Lindsey and its operating companies also invested in the new holding company.

“The proceeds from these investments were used to repay Cunningham Lindsey’s C$72.8 million (US$73.3 million) unsecured term loan facility and for working capital,” said the bulletin.

It also noted that, “in order to satisfy the condition to the Stone Point investment that Fairfax be the sole shareholder of Cunningham Lindsey, Fairfax acquired all of the outstanding subordinate voting shares of Cunningham Lindsey which it had not previously owned.

“Upon completion of the foregoing going-private transaction and completion of the above-mentioned investments, Fairfax holds an approximately 45 percent interest in the operating companies of Cunningham Lindsey through its 100 percent ownership of Cunningham Lindsey, and senior management of Cunningham Lindsey and its operating companies hold an approximately 4 percent interest in these operating companies.

“On completion of the transaction on December 31, 2007, Cunningham Lindsey’s C$125 million [US$125.87 million] of 7 percent unsecured Series “B” debentures due June 16, 2008 remain outstanding.”

Source: Fairfax Financial Holdings – www.fairfax.ca

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