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  "documentTitle": "Fairfax Financial Holdings Ltd. (FFH)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Muddy Waters Research",
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  "presentationDate": "2024-02-08 00:00:00",
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  "notes": "The slide uses a narrative structure to detail a series of financial transactions over several years to support the thesis of 'disguised debt'.",
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      "text": "In our view, OMERS' investment was actually debt with a 9% coupon.",
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      "kind": "paragraph",
      "text": "Fairfax's first accounting benefit from this transaction was to avoid booking interest expense, which would have totaled approximately ~€44 million (~$50 million), although presumably on balance sheet debt would have carried a much lower cost.",
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      "text": "In December 2015, Fairfax agreed to acquire 80% of Eurolife from Fairfax investee Eurobank. In August 2016, Fairfax formed a 50/50 joint venture with OMERS. Fairfax and OMERS each contributed €162.5 million to the JV entity, Costa Luxembourg Holdings S.à.r.l. (\"Costa\"), for 40 million shares (€4.06 / share).1 OMERS owned \"A Shares\" and Fairfax owned \"B Shares\". The A Shares were entitled to receive 9% p.a. dividends.2 On the same day, Costa closed on the purchase of the 80% Eurolife stake for €321 million.3",
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      "text": "In September 2017, Fairfax and OMERS entered into a redemption agreement.4 Under that agreement, Costa bought 6.1 million of OMERS' shares (15.25%) for €24.8 million (€4.06 / share). In April 2018, Costa bought 1.9 million of OMERS' shares (4.75%) for €7.73 million (€4.06 / share). In June 2018, Costa bought 8.0 million of OMERS' shares (20%) for €32.5 million (€4.06 / share). In July 2021, Fairfax bought the remaining 24.0 million OMERS shares for €97.5 million (€4.06 / share).5 In our view, OMERS' investment was actually debt with a 9% coupon.",
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      "text": "1 Fairfax owned 12,500 more shares for €25,000 more share capital than OMERS out of 80.0 million total shares. 2 Costa Luxembourg Financial Statements 2019, Pg. 102. 3 Costa Luxembourg Financial Statements 2019, Pg. 100. 4 Costa Luxembourg Financial Statements 2018, Pg. 85. 5 Fairfax disclosed in its 2021 AR it paid consideration for these shares of €120.7 million. However, per financials for Costa and Colonnade Financial, €9.752 mm was an investment performance payment, plus €13.52 million of dividends accrued over 18.5 months.",
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      "kind": "title",
      "text": "Eurolife / OMERS – Disguised Debt",
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