FBD chief awaits Fairfax move on its stake
Fairfax may seek a sweetened deal to convert its FBD bond into shares while foregoing interest, CEO Fiona Muldoon has indicated.
Fairfax - the Canadian financial giant founded by billionaire Prem Watsa - can convert a bond into a 19.1pc equity stake in FBD from September 23 under the terms of a 2015 deal.
FBD, Ireland's only stock market-listed insurer, sourced the €70m, 10-year convertible bond from Fairfax to shore up its capital solvency.
Fairfax receives 7pc interest a year on the bond.
The conversion price for the bond is €8.50 per FBD share. But shares in the insurer are currently trading at about €10.40. While the bond can be converted to shares from next month, it must be converted to the equity stake by next March if the shares have been trading above €8.50 for 180 days prior to that date.
Fairfax has already received more than €10m in interest from FBD, while it's also sitting on a paper profit of more than €21m based on FBD's share price yesterday. When the €8.50 conversion price was set in 2015, it was a 37pc premium to the FBD share price at the time.
FBD CEO Fiona Muldoon told the Irish Independent that management at the firm are "very conscious" of the looming conversion window.
She said that the Canadian company has been a "very supportive investor".