Fairfax Financial Holdings Ltd. plans to raise $200 million through an issue of preferred shares, the company said Tuesday.

The Toronto-based insurance holding company said it will issue eight million shares at $25 each to raise its cash position, retire debt and other purposes.

Holders of the Series C preferred shares will be entitled to receive a cumulative quarterly fixed dividend yielding 5.75% annually for the initial five year period ending Dec. 31, 2014. After that, the dividend rate will reset every five years at the five-year Government of Canada bond yield plus 3.15%.

“Fairfax intends to use the net proceeds of the offering to augment its cash position, to increase short term investments and marketable securities held at the holding company level, to retire outstanding debt and other corporate obligations from time to time, and for general corporate purposes,” Fairfax said in a release.

The issue is expected to close on or about October 5.

IE