Fairfax Financial Holdings Ltd. has agreed to invest C$150 million in Calgary, Alberta-based investment company Mosaic Capital Corp. on a private placement basis through certain of its subsidiaries.
Fairfax Financial will subscribe for C$100 million of 6% senior preferred securities, C$50 million of 5% seven-year term secured debentures, and warrants to purchase up to 17,026,106 common shares of Mosaic at an exercise price of C$8.81 per share for seven years. Upon full exercise of the warrants, Fairfax Financial would own about 66% of Mosaic's common shares based on the number of shares outstanding.
As part of the transaction, Fairfax Financial and Mosaic agreed to share mid-market private equity opportunities. Fairfax Financial will have the right to nominate two directors to Mosaic's board. Fairfax Financial President Paul Rivett will join Mosaic's board at the closing of the investment. The closing is expected to occur in late January 2017, subject to certain conditions, including the approval of TSX Venture Exchange.
Mosaic will use the proceeds from the investment to redeem all of its outstanding preferred securities and series A shares, retract its private yield securities, provide a liquidity option for the holders of its outstanding convertible debentures, and repay all or part of its acquisition credit facility and for general corporate purposes.