It was recently announced that Fairfax Financial Holdings will make a considerable investment in Westaim, in exchange for the issuance by the latter of 5% interest bearing notes and common share purchase warrants.
According to a release, Fairfax has agreed to subscribe – on a private placement basis and subject to certain conditions – for Preferred Securities at a combined amount of up to $100 million. Westaim means to close an initial subscription of $50 million and has discretion with respect to additional subscriptions by Fairfax for the remaining $50 million (in minimum tranche sizes of $25 million) by no later than December 31, 2017.
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The Preferred Securities will be subordinate and secured, and can be redeemed by Westaim any time after five years from the close of the deal, or after three years should its common shares trade at least $5.60 per share.
Westaim has also agreed to issue 28,571,430 warrants, which are exercisable at $3.50 per share.
Additionally, Fairfax has agreed to invest up to US$500 million in investments sourced by Arena Investors, an affiliate of Westaim.
Proceeds raised from the financing will be used by Westaim for potential acquisitions and general corporate purposes, a release said.
The closure of the transaction is subject to the settlement of mutually agreeable definitive documentation, the approval of the TSXV and other involved third parties, and other closing conditions: it is expected to occur in the second quarter of 2017.
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Following the deal, Fairfax will earn the right to nominate one director to Westaim’s board of directors.
“Fairfax, with their exceptional track record in both the investment and insurance industries, make an ideal partner for Westaim as we look to grow HIIG and Arena, and pursue our long-term goals,” said Westaim president and CEO J. Cameron MacDonald. “We are very excited about this new relationship for Westaim, and look forward to exploring additional investment opportunities with Fairfax as part of this partnership.”
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