The Brick

[basl1]

Today the brick is offering a debenture for 25 million paying 12% for 5 years. It also is offering the possibility of buying the share at $1.00 in the future. It is being co-ofered by Bill Comry, owner of the brick and Fairfax. It's for only 25 million.

 

I'm not sure if I can get in, but have requested so. 's only available to those who own brick shares)

[basl1]

Here it is more properly stated

 

TORONTO, ONTARIO -- (Marketwire) -- 05/07/09 -- Fairfax Financial Holdings Limited (TSX: FFH)(NYSE: FFH) announced today that it has agreed to acquire on a private placement basis, through its subsidiaries, $40 million of debt units (the "Debt Units") to be issued by The Brick Group Income Fund (the "Brick"). The private placement is part of a larger recapitalization transaction by the Brick which includes an offering of $110 million of Debt Units, consisting of $85 million of Debt Units via private placement and $25 million of Debt Units via a public offering (the "Public Offering"). Each Debt Unit consists of $1,000 principal amount of 12% senior secured debentures maturing May 30, 2014 and 1,000 warrants. Each warrant entitles the holder to purchase one Class A unit of the Brick at any time prior to 5:00 p.m. (Eastern time) on May 27, 2014 at an exercise price of $1.00 per Class A Unit, subject to certain anti-dilution adjustments. In addition to the private placement, Fairfax has agreed to provide a stand-by commitment to purchase the Debt Units offered under the Public Offering that are not acquired by public investors in exchange for a fee.

 

Assuming full exercise of the warrants to be acquired under the private placement by Fairfax (and no exercise of warrants by other holders), Fairfax's total holdings in the Brick will be 48,380,200 Class A Units or approximately 51.37% of the total Class A units outstanding. The Debt Units are being purchased for investment purposes. Fairfax continually reviews its investment alternatives and may purchase additional units of The Brick Group Income Fund from time to time in accordance with applicable laws.

 

Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.

 

[JAllen]

It's a 203% increase in shares outstanding!  Ouch!

 

 

http://www.newswire.ca/en/releases/archive/May2009/07/c9405.html

[Zorrofan]

On the other hand, a few years from now when things improve, FFH will own/control the Brick. This might be a nice little money spinner five years from now.....its not JNJ but hey, who knows?

 

cheers

Zorro

[ECCO]

I just hope its not another Canwest or Abitibi. But it look like another cigar but investment.

 

Leon and BMTC (gbt.a) are much more well run and are strong competitor.

 

 

ECCO

 

 

 

[Partner24]

I just hope its not another Canwest or Abitibi. But it look like another cigar but investment.

 

Leon and BMTC (gbt.a) are much more well run and are strong competitor.

 

Good observation. That being said, the situations are differents in some aspects.

 

Abitibi and Canwest don't have time on their side (especially Abitibi). But I don't see why 10, 20, 30 years from now why people will not buy new furnitures. You always need a place to sit, sleep, diner, etc. and I would be surprised that people will buy their furnitures by Internet in China without seing them in person first and get it delivered in their homes so they'll don't need their local retailer anymore as a valuable intermediary. And it's more heavy stuff to ship overseas than a collectible coin.

 

Now, that's not because an industry might not face some kind of permanent headwind that every business in it are good investments (see the recent history of Jean Coutu investments in the U.S.). I also think that Leon and BMTC Group are better operated retailers. They weren't swimming naked. The Brick was (their "the unbeatable" slogan in french radio and tv commercials, with some insight, was some kind of a joke).

 

That being said, the actual recession is not permanent and if they can get out of trouble, it might be a very decent investment over time. Time will tell.

 

Cheers!

 

[basl1]

The Brick has made its way through several recessions. They survived and thrived in 82-83, gobbling market share. The banks have a great relationship with the brick. FFh and Bill Comry at taking up most of this offering, and only 25 million is being offered to the general public.

 

Certainly, there is some risk. This is a bet on management.

[ECCO]

Abitibi and Canwest don't have time on their side (especially Abitibi). But I don't see why 10, 20, 30 years from now why people will not buy new furnitures.

 

That being said, the actual recession is not permanent and if they can get out of trouble, it might be a very decent investment over time. Time will tell.

 

 

 

Partner24, I agree with you that its not exactly the same situations. But you dont do that kind of deal if there is not a sort of emergency, i think the timer was on here too.

 

Guys at Fairfax were definitely thinking it was a good deal when they bought the stock at around 8$, thats kind of look like the Canwest story.

 

I also agree that people will still buy furnitures in 10-20-30 years, but is Brick gonna still be there? Leon and BMTC might kill Brick before.

 

I lived in Montreal and I can tell you that service at BMTC is much more better than The Brick service. Every people I know that bought at both places had the same feeling.

 

I might be wrong, and as you say time will tell.

 

 

ECCO

[ECCO]

The experience I have is in the Quebec market, Brick should be stonger in other provinces, but in Québec it could take a lot of time before it goes better for them.

 

ECCO