Fairfax Financial Holdings To Raise Stake In Eurobank Properties

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Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH) will raise its stake in Greek’s Eurobank Properties to 42 percent from 19.

Fairfax Financial Holdings To Raise Stake In Eurobank Properties

Canadian investment firm Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH) and Greek real estate firm Eurobank Properties announced their intention to strengthen and enhance the operations of Eurobank Properties.

Eurobank Ergasias S.A. (Eurobank) and Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH) announced that their respective managements agreed to the principal terms of the proposed transaction. They also declared intention to make Eurobank Properties a leading real estate company in Greece.

Fairfax To Increase Its Stake To 42 Percent

As part of the deal, Eurobank Properties would proceed with a rights offering of about 200 million euros at an offer price of 4.80 euros per share.

Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH) would exercise its own rights entitlement besides purchasing Eurobank’s rights for 20 million euros ($26.78 million).

The arrangement would help the Canadian investment firm to enhance its existing stake in the Greek real estate firm to about 42 percent from the current 19 percent. Eurobank would hold about 33.5 percent, post the rights offer.

Eurobank To Retain Management Control Till 2020

Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH) and Eurobank would enter into a shareholders’ agreement facilitating Eurobank to retain its management control of Eurobank Properties until 30 June 2020. However, Fairfax Financial would have board representation at Eurobank Properties besides customary veto rights.

The deal is subject to finalizing documentation and obtaining all regulatory and other required approvals. The proposed deal is expected to close within the third quarter of 2013. Eurobank expects that the deal would further strengthen its capital position following its successful recapitalization from the HFSF and its recent liability management exercise.

Prem Watsa said he believes that Greece has taken significant steps towards addressing many of the key areas of its economy, thus encouraging foreign investment and creating a positive momentum that will foster increased employment and development in the country.

Prem Watsa is the Chairman and chief executive officer of Fairfax Financial Holdings Ltd (OTCMKTS:FRFHF) (TSE:FFH). He is considered the ‘Canadian Warren Buffet’. Earlier Fairxfax agreed to acquire American Safety Insurance Holdings, Ltd. (NYSE:ASI) for $306 million.

In its recent 13F filing, the investment management firm disclosed its top stockholdings that include Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)/Blackberry which represents 29.96 percent, Johnson & Johnson (NYSE:JNJ) 18.08 percent, Resolute Forest Products (NYSE:RFP) 14.96 percent, Level 3 Communications, Inc (NYSE:LVLT) 9.79 percent, and SandRidge Energy, Inc (NYSE:SD) 6.38 percent of its portfolio.

Recently, Fairfax Financials announced that it had earned $161.6 million or $7.12 a share, in the first three months of the year.

Commenting on the deal, Nikolaos Karamouzis, Deputy Chief Executive Officer of Eurobank remarked the deal is a transformational transaction for Eurobank Properties, enabling the company to play a leading role in real estate privatizations and the commercial real estate market in Greece and in the region.

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About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports

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