Fairfax Financial Holdings Issues Convertible Debentures

On July 18, 2003, Fairfax Financial Holdings Limited completed an offering of US$150 million aggregate principal amount of its 5 per cent convertible senior debentures due in 2023. The debentures were privately placed with a group of initial purchasers led by Banc of America Securities LLC and were resold in the U.S. to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act of 1933. The initial purchasers exercised an option to purchase an additional US$50 million aggregate principal amount of the debentures, resulting in a total offering of US$200 million aggregate principal amount.

The debentures are convertible, at the holders option, upon the occurrence of certain events, into 4.7057 subordinate voting shares of Fairfax. The conversion rate initially represents a conversion price of approximately US$212.51 per share.

On August 11, Fairfax filed a base shelf prospectus with the Ontario Securities Commission and the U.S. Securities and Exchange Commission under the multijurisdictional disclosure system to permit resales in the U.S. of the debentures and the subordinate voting shares issuable upon the conversion, redemption, purchase or maturity thereof.

Fairfax was represented in Canada by Torys LLP, with a team that included David Chaikof, John Emanoilidis, Gavin Sinclair and James Welkoff (tax); and in the U.S. by
Shearman & Sterling LLP in Toronto, with a team that included Brice Voran, Adam Givertz, Douglas Nathanson, Brent Westrop and Larry Crouch (tax).

The initial purchasers were represented by Simpson Thacher & Bartlett LLP in New York, with a team that included Peter Gordon, Steve DeLott, Doug Chia and Shana Neiditch.