Cunningham Lindsey makes deal with Fairfax, Stone Point Capital

Fairfax Financial Holdings Limited (TSX:FFH)(NYSE:FFH) and Cunningham Lindsey Group Inc. (TSX:LIN) have entered into an agreement with private equity funds managed by Stone Point Capital LLC, in which Stone Point will pay about $80 million for a 51% interest in a newly-formed holding company that will own the operating businesses of Cunningham Lindsey.

Fairfax will invest approximately $30 million; senior management of Cunningham Lindsey and its operating companies will be investing as well.

“The proceeds from these investments will be used to repay Cunningham Lindsey’s $72.8 million unsecured term loan facility and for working capital,” Jan Christiansen, Cunningham Lindsey’s president and CEO said in a press release.

In order to satisfy the condition to the Stone Point investment that Fairfax be the sole shareholder of Cunningham Lindsey, Fairfax will make a cash offer of approximately $10 million in total (included in the $30 million amount above) to acquire all of the outstanding subordinate voting shares of Cunningham Lindsey that it does not currently own.

On completion of the proposed transaction, anticipated to occur by mid-December, Cunningham Lindsey’s subordinate voting shares will be delisted from the Toronto Stock Exchange.