prospectus fairfax preferred reset exchang

8/4/2019 Prospectus Fairfax Preferred Reset Exchang

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John Fairfax Holdings Limited ABN 15 008 663 161

PRESSESPreferred Reset Securities Exchangeable for Shares

PROSPECTUS FOR A PUBLIC OFFER OF PRESSES TO RAISE A MINIMUM OF $200 MILLION

LEAD MANAGER AND UNDERWRITER

UBS WARBURG AUSTRALIA LIMITED


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CONTENTS

This Prospectus was lodged with ASIC on

and is dated 1 November 2001.

ASIC and the ASX take no responsibility for

the contents of this Prospectus. Fairfax will

apply within 7 days after the date of this

Prospectus for the grant by the ASX of

official quotation of the Presses.

No securities will be allotted or issued on the

basis of this Prospectus later than thirteen

months after the date of this Prospectus.

This Prospectus will be made generally

available during the exposure period by

being posted on the Fairfax web site at

www.fxj.com.au. Printed copies of this

Prospectus are available from the date

the Offer opens and during the Offer

period by calling the Fairfax Presses

information line on 1800 301 050.

Applications under this Prospectus will

not be accepted by Fairfax prior to the

opening of the Offer, and in any case,

until after expiry of the exposure periodand the passing of a special resolution

at the Fairfax Annual General Meeting to

be held on 7 November 2001 to adopt a

new constitution. The exposure period is

generally 7 days from the date of lodgement

of the Prospectus with ASIC which may be

extended by ASIC to a period of 14 days.

No preference will be conferred on persons

who lodge applications before the expiry

of the exposure period.

Applicants should read this Prospectus in its

entirety before deciding to participate in the

Offer. If after reading this Prospectus, you

have any questions about the Offer, youshould contact your stockbroker, accountant,

financial or other professional adviser.

Applications for Presses can only be

submitted on original Application Forms

attached to and forming part of, or

accompanying, this Prospectus. Application

forms are only available with a Prospectus,

and may be obtained electronically from the

Fairfax website during the Offer period.

Please refer to Section 1.1.

Some words used in this Prospectus have

defined meanings (see the Glossary at the

end of this Prospectus).

Disclaimer

No person is authorised to give any

information or to make any representation

in connection with the Offer described in

this Prospectus which is not contained in

this Prospectus. Any information or

representation not so contained may not

be relied upon as having been authorised

by Fairfax in connection with the Offer.

Except as required by law and only to the

extent so required, neither the Company

nor any other person warrants the future

performance of the Company or any return

on any investment made pursuant tothis Prospectus.

Offers outside Australia

This Prospectus does not constitute an offer

of, or an invitation to subscribe for, any of

the Presses in any place in which, or to any

person to whom, it would be unlawful to

make such an offer or invitation.

No action has been taken to register or

qualify the Presses or to otherwise permit

a public offering of the Presses outside

Australia. The Presses may be offered in

a jurisdiction outside Australia where such

an offer is made in accordance with thelaws of that jurisdiction.

Due to regulatory requirements, the

invitation to apply for Presses is not

extended to Shareholders resident in the

United States. Shareholders resident in the

United States should also refer to Section 7.

Important Information

Chairmans letter 1

1. Presses summary, how to invest and answers to key questions 2

2. Details of the Offer 7

3. Fairfax and its operations 8

4. Effect of the Presses issue on Fairfax 95. Risk factors 12

6. Taxation letter to Fairfax 14

7. Additional information 19

Appendix A Terms of Presses 25

Glossary 34

Corporate directory Inside Back Cover

SUMMARY OF KEY DATESEligible Employee Entitlement Date 31 October 2001

Fairfax Annual General Meeting 7 November 2001

Shareholder Entitlement Date 12 November 2001

Offer opens 14 November 2001

Offer closes (1) 6 December 2001

Allotment 12 December 2001

Presses commence trading on the ASX on a deferred settlement basis (1) 13 December 2001

Despatch of holding statements (1) 17 December 2001

Presses trade on the ASX on a normal settlement basis (1) 18 December 2001

First Dividend Payment 12 June 2002

First Reset Date 12 December 2006

Note:(1) These dates are indicative only and are subject to change. Fairfax may, with the consent of the Underwriter, closethe Offer early or extend the Closing Date of the Offer without notice. If the Closing Date of the Offer is varied, thesubsequent dates may also vary. Investors are encouraged to submit their original Application Forms as soon aspossible after the Offer opens.


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1FairfaxPRESSES

ABN 15 008 663 161

John Fairfax Holdings Limited

1 November 2001

Dear Investor,

On behalf of the Board of John Fairfax Holdings Limited (Fairfax), I am pleased to offer you thisopportunity to invest in Fairfax, one of Australias leading publishing groups, through an issue of PreferredReset Securities Exchangeable for Shares (Presses).

The purpose of the issue of Presses is to strengthen Fairfaxs balance sheet by reducing debt, diversifyingits equity base and increasing funding flexibility. This will ensure Fairfax is well placed to take advantage ofgrowth opportunities.

Key features of Presses include:

Preferred dividend Fully franked dividend for the first five years of at least 6% p.a. on an Issue Priceof $100;

Exchange for Ordinary Shares Flexibility to Exchange for Ordinary Shares in five years; and

Participation in growth Opportunity to participate in any increase in the Fairfax Ordinary Share priceabove $6.15.

Fairfax may reset the Dividend Rate and other terms on certain dates, the first of which is 12 December2006. Before those new terms take effect, holders of Presses may elect to Exchange their Presses forOrdinary Shares.

Fairfax proposes to issue a minimum of 2 million Presses (with a right to accept over-subscriptions of up to0.5 million Presses) at an issue price of $100 each to raise a minimum of $200 million and up to $250 million.Some priority will be given to Fairfax Shareholders and Eligible Employees over other applicants who do notreceive an allocation either directly or indirectly from the Underwriter prior to the date of the opening of theOffer. The minimum investment for applicants is $2,000. The Offer is underwritten by UBS Warburg to theamount of $200 million. Fairfax will have the discretion to accept Applications for up to a further $50 millionof Presses.

This Prospectus contains details of the Offer, the terms of the Presses, the terms of the underwriting and

a description of some of the risks associated with an investment in Presses. Please read it carefully beforedeciding whether to invest. If there is any matter on which you require further information or if you areuncertain as to whether Presses are a suitable investment for your purposes, you should consult yourstockbroker, accountant, financial or other professional adviser.

On behalf of the Board of Fairfax, I am pleased to offer this investment opportunity to you.

Yours faithfully

Brian M PowersChairman


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2

1. PRESSES SUMMARY

Fairfax proposes to raise a minimum of $200 million through the issue of Presses with the right to accept up to a further$50 million in over-subscriptions.

Set out below is a summary of the key terms and conditions of the Presses. This information is a summary only, and should

be read carefully in conjunction with the other information contained in this Prospectus, including the full terms of issue setout in Appendix A. If you are uncertain if Fairfax Presses are a suitable investment for you, you should consult a stockbroker,accountant, financial or other professional adviser.

Issuer John Fairfax Holdings Limited.

Security Non-redeemable reset Exchangeable preference shares.

Issue size An underwritten issue of 2 million Presses with the right to accept subscriptions for up to afurther 0.5 million.

Issue price $100.

Dividend Rate The dividend rate is the greater of 6% and the Swap Rate (on the allotment of the Presses)plus 1% p.a. It is a preferential non-cumulative dividend fixed until the first Reset Date payable

semi-annually in arrears generally in June and December each year. The first dividend will be paidin June 2002. The Dividend Rate will be increased if the Credit Rating of the Presses falls belowBBB. The dividend may be increased or decreased on Reset Dates. The first Reset Date is12 December 2006. Payment of dividends is at the discretion of Directors and is subject to theDirectors declaring or otherwise resolving to pay a dividend and there being no impediment underthe Corporations Act to the payment.

Franking The Dividend Rate assumes full franking up to the corporate tax rate. If a dividend is unfrankedor partially franked, the dividend will be increased to compensate for the unfranked amount.

Exchange On Reset Dates some or all of the outstanding Presses may be Exchanged for Ordinary Sharesat the option of holders of Presses or Fairfax. In certain circumstances, Exchange may occurother than on Reset Dates.

Exchange Ratio Each of the Presses will Exchange for a number of Ordinary Shares calculated generally by

applying the Exchange Discount to the volume weighted average sale price of Ordinary Sharestraded on ASX during the 20 Business Days immediately preceding the date of Exchange.

The number of Ordinary Shares issued on Exchange of each of the Presses will be subject toa minimum of 16.6771 and a maximum of 1,000, subject to certain adjustments.

Exchange Discount 2.5%.

Credit Rating The Presses have a Credit Rating of BBB (as at the date of this Prospectus).

Reset Dates Certain terms including the Dividend Rate, Exchange terms, and Exchange Discount may be reseton each Reset Date. The first Reset Date will be 12 December 2006 and thereafter as determinedby Fairfax.

Ranking Dividends on the Presses will be paid in priority to any dividends declared on Ordinary Shares.

In a winding up, the Presses will rank for repayment of capital behind all creditors of Fairfax butahead of Ordinary Shares.

Participation Prior to Exchange, holders of Presses do not have a right to participate in issues of newsecurities to, or capital reconstructions affecting, holders of Ordinary Shares. However, theminimum and maximum number of Ordinary Shares to be issued on Exchange may be adjustedfor rights issues, bonus issues, capital reconstructions, capital distributions and off-marketbuybacks, where appropriate.

Voting Rights No right to vote at general meetings except in limited circumstances. In these circumstancesthe Presses carry one vote each.

Listing Application will be made to have the Presses granted official quotation on the ASX.

FairfaxPRESSES


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PRESSES A new opportunity to invest in FairfaxPreferred dividend Fully franked dividend for first five years of the greater of 6% and the Swap Rate

(on the allotment of the Presses) plus 1% p.a.

Exchange for Ordinary Shares Flexibility to Exchange for Ordinary Shares worth at least $102.56 in 5 years (1).

Participation in growth Opportunity to participate in any increase in Ordinary Share price above $6.15.

FAIRFAX One of Australias leading publishing groups

Fairfax is one of Australias leading publishing groups with revenue forthe 2001 financial year of over $1.3 billion. Fairfax recently announced afull year net profit after tax for the 2001 financial year of approximately$128 million.

Fairfax ordinary shares are listed on ASX. Based on the closing ordinaryshare price on 30 October 2001 of $3.46, Fairfax had a marketcapitalisation of approximately $2.54 billion.

Fairfaxs franchises, in print and online, are among the companys greateststrengths. The portfolio of mastheads and brands includes The SydneyMorning Herald, The Australian Financial Review, The Age, The SunHerald, The Good Weekend, BRW, Sharesand Personal Investor. The f2interactive network has a number of Australias leading online news sites.

Fairfax has a track record of consistently paying dividends since its listingin 1992.

Fairfax has a strong financial profile, with an investment grade credit ratingand retained earnings as at 30 June 2001 in excess of $500 million.

There are particular risks associated with investing in Presses, as well asgeneral risks associated with investing in Fairfax. These risks are set outin Section 5.

Note:

(1) Based on the volume weighted average Ordinary Shares price over the 20 BusinessDays generally immediately prior to Exchange, and generally provided that the volumeweighted average sale price of Ordinary Shares in the 20 Business Days prior to Exchangeis greater than $0.10.

3FairfaxPRESSES

Revenue

Earnings before interest, tax, depreciationand amortisation (EBITDA)

Dividend Full year

Financial Strength


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4Presses summary (continued)

1.1 How to invest

When to apply

The Offer will open at 9.00 am (Sydneytime) on 14 November 2001 (subject toFairfax Shareholders approving a newconstitution for the company at theAnnual General Meeting to be heldon 7 November 2001), and is expectedto close at 5.00 pm (Sydney time) on6 December 2001.

Applications must be receivedat Computershare InvestorServices Pty Limited by no laterthan 5.00 pm (Sydney time) on6 December 2001.

Fairfax may close the Offer early orextend the Closing Date withoutnotice. Investors are encouraged tosubmit their Application Forms as soonas possible after the Offer opens. If theClosing Date is varied, subsequentdates may also be varied accordingly.

How to apply

To apply for Presses, you mustcomplete the Application Form attachedto or accompanying this Prospectus inaccordance with the instructions setout below and on the Application Form.

Your completed Application Formand payment should be returned inaccordance with the instructions setout below.

Fairfax Shareholders

If you were registered as a FairfaxShareholder at 7.00 pm Sydney time on12 November 2001, you should receivea blue personalised Application Formwith your copy of this Prospectus.You must use the blue personalisedApplication Form, to ensure that you

receive your Shareholder priority.

If you own shares under the FairfaxEmployee Exempt or Deferred ShareSchemes at 7.00 pm Sydney time on31 October 2001, you will be deemedto be a Shareholder for the purposeof receiving priority and should use theblue personalised Application Form.

If you are a Shareholder and did notreceive your blue Application Form,please call 1800 301 050.

Fairfax Eligible EmployeesIf you qualified as an EligibleEmployee at 7.00 pm Sydney timeon 31 October 2001, and requested aProspectus, you should have receiveda yellow personalised Application Formwith your copy of this Prospectus.

You must use the yellow personalisedApplication Form, to ensure that youreceive your Eligible Employee priority.

Eligible Employees who are alsoShareholders (or deemed to beShareholders) will be entitled to theShareholder priority only and will notreceive an additional Eligible Employeepriority.

Other applicants

If you were not a Fairfax Shareholder at7.00 pm Sydney time on 12 November2001 and are not an Eligible Employee,you should use the brown ApplicationForm attached to or accompanying thisProspectus.

Where to send your completedApplication Form

Completed Application Forms, includingApplication Forms obtained from theFairfax website (www.fxj.com.au) (butexcluding applications for institutionalinvestors and broker firm allocations),and accompanying cheques must bemailed or delivered to:

Computershare Investor ServicesPty LimitedLevel 2

60 Carrington StreetSydney NSW 2000

or

Computershare Investor ServicesPty LimitedGPO Box 7115Sydney NSW 2001

Application Forms and accompanyingcheques will not be accepted atFairfaxs registered office.

Payment

Application Forms, duly completed,must be accompanied by a cheque ormoney order in Australian dollars drawnon an Australian branch of a financialinstitution. Cheques should be crossednot negotiable and made payable toFairfax Presses Offer Account.

Broker firm and institutionalapplications

If you have received a firm allocation ofPresses from a Broker to the Offer,your application and paymentprocedures will differ in two important

respects from that described above:

Your broker will be acting as youragent in applying for Presses andyour application cheque must bemade payable to the broker, not toFairfax Presses Offer Account.

Your completed Application Formand application cheque must bedelivered to the Broker directly (notto Computershare Investor Services

Pty Limited). Your broker will thendeliver these to Fairfax on yourbehalf.

These differences, and any otherrequirements, will be explained to youby your broker. If you have a firmallocation of Presses and are in anydoubt about what action you shouldtake, you should immediately contactthe broker who has made you an offerof a firm allocation.

If you are an institutional investor,application payment procedures will be

notified to you by the Lead Manager.

Minimum application

The price for each of the Pressesis $100. Applications must be for aminimum of 20 Presses ($2,000).

Brokerage and stamp duty

No brokerage or stamp duty on theallocation of Presses is payable.

Refunds

If you are allocated fewer than thenumber of Presses you applied for, youwill receive a refund cheque as soon aspracticable after the conclusion of theOffer. No interest will be payable onapplication monies.

Who may apply?

Only Australian residents or personssituated in jurisdictions outsideAustralia to whom an offer may bemade in accordance with the lawsof that jurisdiction may apply for

Presses under this Prospectus.These restrictions also apply to FairfaxShareholders and Eligible Employees.

Enquiries

If you require assistance to completethe Application Form, or requireadditional copies of this Prospectus,you should contact the Fairfax Pressesinformation line on 1800 301 050.

If you are unclear in relation to anymatter or are uncertain if Presses are asuitable investment for your purposes,

you should contact your stockbroker,accountant, financial or otherprofessional adviser.

By returning an Application Form,you acknowledge that you havereceived and read this Prospectus.

FairfaxPRESSES


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1.2 Answers to keyquestions

The purpose of this Section is to

answer some of the questions whichyou may have about Presses. Theseanswers are intended as a guide only.Further details are provided elsewherein this Prospectus, which you shouldread. The terms of issue of the Pressesare set out in full in Appendix A.

What are Presses?

Presses are a class of Fairfax share,which entitle holders to a fully frankeddividend in preference to any dividendspaid on Ordinary Shares.

Presses rank in priority to OrdinaryShares for payment of dividends andfor a return of capital on a winding-up.Fairfax may not issue shares rankingin priority to Presses without the priorapproval of holders of Presses.

When will dividends be paid?

Subject to the conditions describedbelow, dividends will be payablesemi-annually generally in June andDecember each year with the firstdividend being payable in June 2002.

How will dividends bedetermined?

During the first five years of issue,holders will be entitled to a non-cumulative fully franked preferencedividend of the greater of 6% and theSwap Rate (on the allotment of thePresses) plus 1% p.a. This dividendentitlement is subject to the Directorsdeclaring or otherwise resolving to pay adividend and there being no impedimentunder the Corporations Act to the

payment.

If the Credit Rating of the Pressesdrops below BBB for any periodbefore the first Reset Date, the amountof the dividend will be increased by0.75% p.a. (in accordance with theterms of issue of Presses) for each daythe Credit Rating remains below BBB.

The Dividend Rate may be reset byFairfax on 12 December 2006 and,following this, on later specified ResetDates. This rate may be above or

below the initial or subsequentDividend Rate.

On Reset Dates, holders mayExchange the Presses for OrdinaryShares in accordance with theExchange formula set out in the terms

of issue.

If a dividend is unfranked or partiallyfranked, it will be increased tocompensate for the unfranked portionin accordance with the formula set outin the terms of issue.

Will dividends always be paid?

Presses are not debt instruments, anddividends are not the same as interestpayments.

Payment of dividends on Presses issubject to the Directors declaring orotherwise resolving to pay a dividend,and there being no impediment underthe Corporations Act to the payment.Generally speaking, dividends may bepaid only out of current years profitsor retained earnings. Accordingly, ifthere are insufficient profits or retainedearnings in any period, a dividendcannot be paid. As at 30 June 2001,Fairfax had retained earnings in excessof $500 million.

Dividends on Presses will be paid in

priority to any dividends paid onOrdinary Shares and no dividend maybe paid on Ordinary Shares if either ofthe two immediately precedingPresses dividends has not been paidin full. Dividends are non-cumulative,and therefore if a dividend is not paid inrespect of any one period, Fairfax is notobliged, but may elect, to make it up inany subsequent period.

What happens on Reset Dates?

On Reset Dates, specified terms of

the Presses may be changed, includingthe Dividend Rate, Exchange termsand Exchange Discount. The firstReset Date is 12 December 2006. Onreceiving notice that terms are to bechanged, holders of Presses may electto Exchange their Presses into OrdinaryShares in accordance with the Exchangeformula set out in the terms of thePresses prior to the change, or toretain their Presses on the new terms.

When will Exchange occur?

Either Fairfax or the holders of Pressesmay Exchange all or a portion of the

Presses for Ordinary Shares on a ResetDate. The first Reset Date will be12 December 2006.

In certain circumstances, all, or a portionof, the Presses may be Exchanged earlyby either Fairfax or holders of Presses.

What happens on Exchange?

On Exchange, each of the Presses willExchange for Ordinary Shares that willrank equally in all respects with OrdinaryShares from the Exchange date.

Each of the Presses will generallyExchange for Ordinary Shares at a2.5% discount to the weighted average

sale price of Ordinary Shares traded onthe ASX during the 20 Business Daysimmediately preceding the date ofExchange.

Accordingly, the number of OrdinaryShares issued on Exchange will varydepending on the Ordinary Share priceprior to Exchange. This means that,if the Ordinary Share price is above$0.10, holders of Presses will receiveOrdinary Shares with a value (basedon the previous 20 Business Days)of at least $102.56.

However, the number of OrdinaryShares to be issued on Exchangeof each Presses will be subject to aminimum of 16.6771 and a maximumof 1,000.

Holders of Presses will also generallyparticipate in any increase in theaverage sale price of Ordinary Sharesover the 20 Business Days prior to theExchange Date above $6.15, as holdersof Presses will receive the minimumnumber of Ordinary Shares regardlessof the average sale price of the

Ordinary Shares during that period.If the average sale price of OrdinaryShares over that period is below $0.10,holders of Presses are exposed todecreases in the average sale price ofOrdinary Shares and may receiveOrdinary Shares with a value less than$102.56.

The value of Ordinary Shares thatholders of Presses receive onExchange is not guaranteed to beabove the Issue Price. The followingtable shows the number and value ofOrdinary Shares received on Exchangeat various share prices.

5O

FairfaxPRESSES


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6Presses summary (continued)

Can Fairfax redeem the Presses?

Presses cannot be redeemed by Fairfax.

Will I be able to requestrepayment of my investment?

Investors will have no right to requireFairfax to repay the money originallypaid for Presses except in a winding upof the Company. On Reset Dates, andin certain circumstances prior to ResetDates, investors may elect to Exchangetheir Presses for Ordinary Shares.

In a winding up, what willholders of Presses receive?

In the event of a winding up of Fairfax,investors will be entitled to a return ofcapital of up to the face value of thePresses and any accrued dividendentitlement after all creditors and otherliabilities of the Company have beenpaid. Holders of Presses will rankahead of holders of Ordinary Shares ina winding up to the extent of the facevalue of the Presses and any accrueddividend entitlement.

In the event of a shortfall of funds on awinding up, holders of Presses will notreceive a full return of capital or accrueddividend entitlement on the Presses.

Can Presses be purchased orsold on the ASX?

Fairfax will apply for Presses to bequoted on the ASX. Once quoted,Presses can be purchased or soldthrough any stockbroker.

What are the taxation andentitlement implications ofholding or selling Presses?

The taxation implications of investingin Presses will depend on investors

individual circumstances. A generaloutline of the taxation consequencesof holding or selling Presses appears inthe letter from Greenwoods & FreehillsPty Limited to Fairfax set out in Section6. However, this is not a substitute forprofessional advice and it is thereforeimportant that you consult yourtaxation adviser if you are in any doubtas to the suitability of the Presses asan investment in your circumstances.

If relevant, you should also seek adviceon the treatment of holding Pressesunder the terms of pension or other

Government benefits to which youmay be entitled.

Do Presses have voting rights?

Presses do not have voting rights,except in the limited circumstancesspecified in the terms of the Pressesset out in Appendix A, when each ofthe Presses will carry one vote.

Is brokerage or stamp dutypayable?

No brokerage or stamp duty on theallotment of Presses is payable byinvestors. However, brokerage may be

payable on any subsequent transfer ofPresses.

What are the risks of investingin Presses?

An investment in Fairfax, through thePresses, will involve some risks. Youshould refer to Section 5 for furtherinformation.

You should read the whole of this

Prospectus carefully. If you areunclear in relation to any matter or

uncertain if Presses are a suitable

investment for you, you shouldconsult your stockbroker, accountant,

financial or other professional adviser.

FairfaxPRESSES

Number and value of Ordinary Shares received on Exchange

Average Ordinary Number of Ordinary Shares (1) Value of OrdinaryShare price Exchange issued on Exchange Shares issued

during VWAP period discount (for each Presses) on Exchange

$0.05 2.50% 1000.0000 $50.00

$0.10 2.50% 1000.0000 $100.00

$0.20 2.50% 512.8205 $102.56

$3.00 2.50% 34.1880 $102.56

$5.00 2.50% 20.5128 $102.56

$6.00 2.50% 17.0940 $102.56

$7.00 2.50% 16.6771 $116.74

$8.00 2.50% 16.6771 $133.42

Note:

(1) Where the total number of additional Ordinary Shares to be allotted on Exchange to a Presses holder includes a fraction, that number will be roundeddown to the next whole number.


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2.1 Structure ofthe offer

Allotment and allocation policyFairfax intends to allot the Presses on12 December 2001.

The Acceptance of Applications forPresses pursuant to this Prospectus isconditional upon the passing of a specialresolution to adopt a new constitutionby shareholders at the Fairfax AnnualGeneral Meeting to be held on7 November 2001.

The Underwriter has the right, inconsultation with Fairfax, to nominatethe persons to whom the Presses willbe allocated, including firm allocationsto institutional investors, Brokers andBrokers for their private clients. Thedistribution by a Broker to its clientswill be at the discretion of that Broker.

If there is excess demand for Presses,Fairfax has the right, followingconsultation with the Underwriter, toaccept subscriptions of up to a totalamount of 2.5 million Presses, or toscale back applications (by issuingfewer Presses to applicants than thenumber applied for), or a combination

of both.

Fairfax and the Underwriter reserve theright to reject any Applications, or toallocate any applicant a lesser numberof Presses than those applied for,including less than the minimumapplication of 20 Presses.

If an Application is not accepted, oris accepted in part only, the relevantpart of the application monies will berefunded to the applicant as soon aspracticable after the Offer closes.

Priority for Fairfax Shareholdersand Eligible Employees

If there is excess demand, applicantswho are Shareholders registered at7.00 pm on 12 November 2001 orEligible Employees who submit a blueor yellow Application Form respectivelywill receive some priority over otherapplicants who do not receive anallocation either directly or indirectlyfrom the Underwriter prior to the dateof the opening of the Offer. The prioritydoes not mean that Shareholders orEligible Employees will necessarily

receive all the Presses for which theyapplied.

The holders of options over OrdinaryShares will not receive priority.

Eligible Employees who are alsoShareholders (or deemed to beShareholders) will be entitled to theShareholder priority only and will not

receive an additional Eligible Employeepriority.

ASX listing

Application will be made to the ASX forofficial quotation of the Presses withinseven days after the date of thisProspectus. If quotation is not granted,the Presses will not be issued andapplication monies will be refundedto applicants.

Provision of holding statements

Fairfax will apply for Presses to begranted official quotation and participatein CHESS and, if granted by the ASX, noshare certificates will be issued. Eachholder of Presses will be provided witha statement of holding which sets outthe number of Presses held.

Statements of holding for the Pressesissued pursuant to this Prospectusare expected to be despatched on17 December 2001.

Deferred settlement trading

It is expected that the trading ofPresses on the ASX will commenceon a deferred settlement basis on13 December 2001, the day followingannouncement of allocations, andwill continue on that basis until18 December 2001. Deferredsettlement trading allows Presses tobe bought and sold on the ASX beforeentries are made in CHESS in respectof holdings of Presses and beforeholding statements are sent out tosuccessful applicants.

On 17 December 2001, Fairfax expectsto despatch shareholder statementsunder CHESS, which will set out thenumber of Presses issued to eachsuccessful applicant. At this time,deferred settlement trading will ceaseand the Presses will commence tradingon the ASX on a normal settlement basis.

It is the responsibility of each applicant

to confirm their holding before trading in

Presses in a deferred settlement market.

Applicants who sell Presses before they

receive their shareholder statements will

do so at their own risk. Fairfax and theUnderwriter disclaim all liability, in

negligence or otherwise, to any person

who trades Presses before receiving

their holding statement, whether on the

basis of a confirmation of allocation

provided by Fairfax or otherwise.

2.2 Other information

Condition precedent to the Offer

The Offer is subject to the passing ofa special resolution by Shareholdersat the Fairfax Annual General Meetingon 7 November 2001 to adopt a newconstitution which, among other things,will permit the issue of preferenceshares having the terms of the Presses.

Underwriting

The issue of 2 million Presses isunderwritten by the Underwriter.A description of the UnderwritingAgreement is set out in Section 7.The underwriting is subject to certaintermination events, details of which arealso set out in Section 7. Subject tocertain conditions, if any of those eventsoccurs, the Underwriter may, at itselection, terminate its underwritingobligations.

Prospectus available online

A copy of this Prospectus may beviewed online in read-only format,without any Application Forms, onthe Fairfax corporate website atwww.fxj.com.au until the date of the

opening of the Offer. From the dateof the opening of the Offer being14 November 2001 and during theOffer period, a copy of this Prospectusmay be obtained with an accompanyingApplication Form. The Offer constitutedby this Prospectus in electronic formis available only to persons accessingthe Prospectus in electronic formwithin Australia.

Persons who receive a copy of thisProspectus in electronic form atwww.fxj.com.au may obtain a paper

copy of the Prospectus (including anyrelevant accompanying ApplicationForm) free of charge, during the Offerperiod by contacting 1800 301 050.

Completed Application Forms must bemailed or delivered to ComputershareInvestor Services Pty Limited in themanner set out in Section 1.1. Thereis no facility for online applications,however, investors may obtain anApplication Form from the Prospectusavailable on the Fairfax website after14 November 2001 and submit thecompleted Application Form to the

address set out in Section 1.1.Shareholders and Eligible Employeesmust use the blue or yellowpersonalised Application Formsrespectively accompanying theirProspectus to ensure they receive theShareholder or Eligible Employee priority.

7

2. DETAILS OF THE OFFERFairfaxPRESSES


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8

3. FAIRFAX AND ITS OPERATIONS

3.1 IntroductionFairfax is one of Australias leadingpublishing groups. A copy of the Full

Financial Report and Concise AnnualReport are available from theCompanys website at www.fxj.com.au.In the 2001 financial year, the Companyreported revenues of over $1.3 billion.Fairfax operates predominantly inAustralia in two business segmentswithin the media industry publishingand online media through the f2interactive network.

The publishing business comprisesgeneral newspapers and businessmedia with publishing activities andadvertising sales in newspaper,

magazine and electronic formats.Fairfaxs f2 interactive networkcomprises two divisions: News andClassifieds, and CitySearch Directories.

3.2 Business profile

Publishing

Fairfax produces a number ofmetropolitan and regional newspapersas well as business and finance dailiesand magazines. Fairfax prides itself onthe independence and integrity of itspublications and strives for excellencein journalism. Fairfax mastheadsinclude The Sydney Morning Herald,The Age, The Australian FinancialReview, The Sun-Herald, BRW, Sharesand Personal Investormagazines.Inserted magazines, which areincorporated in the Fairfax newspapers,include Good Weekend, AFR Bossand

SundayLife! Regional titles include TheNewcastle Heraldand The IllawarraMercury. Fairfax also publishescommunity newspapers throughoutNew South Wales and Victoria.

Publishing operations

Fairfax is presently engaged in projectsto increase colour and print capacity atits existing Chullora plant in Sydneyand to construct and commission anew plant at Tullamarine in Melbourne.Together the projects will cost in theorder of $300 million. Both projects

are on time and on budget and areexpected to be completed duringcalendar year 2002.

f2 fairfax interactive network

f2 is building businesses serving morethan 2.5 million unique users monthly

in two divisions: Newsand Classifieds,which includes one of Australiasleading family of online news sites(smh.com.au, theage.com.au andafr.com) and leading classifiedsupersites for jobs, cars and homes(mycareer.com.au, domain.com.au,and drive.com.au) and CitySearchDirectories(www.citysearch.com.au),which is building an innovativeinteractive and print directory coveringmore than 14 major metropolitan andregional markets in Australia.

3.3 Use of fundsThe purpose of the issue of Pressesis to strengthen Fairfaxs balance sheetby reducing debt, diversifying its equitybase and increasing funding flexibility.This will ensure Fairfax is well placed totake advantage of growth opportunities.

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4.1 Fairfaxs share capitalA summary of Fairfaxs capital structure as at 30 June 2001 and on a proforma basis (assuming that the issue of the Presseswas completed on 30 June 2001) is set out below:

ProformaNumber of shares

30 June 2001 30 June 2001

Ordinary Shares fully paid 734,879,595 734,879,595

Presses 2,000,000(1)

Note:

(1) Fairfax reserves the right to issue up to a maximum of 2,500,000 Presses.

4.2 Fairfax Ordinary Share price historyThe graph set out below shows the closing price of Fairfax Ordinary Shares for the period from 30 September 1996 to30 October 2001(1).

Note:

(1) Past share price performance is not necessarily indicative of future share prices. Nothing in this section should be taken as a forecast or predictionof the future price of Fairfax Ordinary Shares.

4.3 Financial impact of the issueThe following historical and proforma financial statements are derived from Fairfaxs audited financial statements for thefinancial years ended 30 June 2000 and 30 June 2001.

The proforma Statement of Financial Position shown below has been prepared as if the issue of 2,000,000 Presses had been

completed on 30 June 2001 and assumes that the net proceeds of the issue of $194 million (after allowing for transactioncosts of $6 million), are applied to reduce current interest bearing liabilities.

9

4. EFFECT OF THE PRESSESISSUE ON FAIRFAX

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10Effect of the Presses issue on Fairfax (continued)

Statement of Financial Position

At 30 June 2001 proforma 2001 2000$000 $000 $000

Current AssetsCash 8,542 8,542 10,557

Receivables 226,737 226,737 208,962

Inventories 24,973 24,973 19,291

Total Current Assets 260,252 260,252 238,810

Non-Current Assets

Receivables 5,314 5,314 13,944

Investments accounted for using the equity method 4,184 4,184 35,349

Other financial assets 14,491 14,491 9,412

Property, plant and equipment 651,777 651,777 519,559

Intangibles 1,278,431 1,278,431 1,276,865

Tax assets 57,719 57,719 58,804Total Non-Current Assets 2,011,916 2,011,916 1,913,933

Total Assets 2,272,168 2,272,168 2,152,743

Current Liabilities

Payables 158,657 158,657 205,363

Interest bearing liabilities (1) 114,000 308,000 5,000

Tax liabilities 5,198 5,198 60,169

Provisions 93,544 93,544 86,987

Total Current Liabilities 371,399 565,399 357,519

Non-Current Liabilities

Interest bearing liabilities 466,334 466,334 617,507

Tax liabilities 59,142 59,142 47,489Provisions 40,309 40,309 41,675

Total Non-Current Liabilities 565,785 565,785 706,671

Total Liabilities 937,184 1,131,184 1,064,190

Net Assets 1,334,984 1,140,984 1,088,553

Equity

Contributed equity 822,196 628,196 619,163

Reserves 4,915 4,915 5,254

Retained profits 507,873 507,873 464,136

Total parent entity interest in equity 1,334,984 1,140,984 1,088,553

Total outside equity interest

Total Equity 1,334,984 1,140,984 1,088,553

Note:

(1) The 2001 proforma Statement of Financial Position assumes that interest bearing liabilities have been reduced by the proceeds of the issue(net of transaction costs) of $194 million.

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4.4 Ratio analysisThe table below sets out key financial ratios for Fairfax on an historical and proforma basis.

2001 proforma 2001 2000

Basic EPS (cents) 16.83 17.51 25.49

Diluted EPS (cents) 17.18 17.43 25.27

EBITDA/Net interest 9.04 6.84 8.20

Debt/EBITDA 1.94 2.58 1.59

Debt/Debt plus Equity 30.30 40.43 36.38

Notes:

Earnings used for the ratios included in the 2001 proforma assumes that the issue of 2,000,000 Presses was completed on 30 June 2000.

The 2001 proforma earnings used in the above ratio analysis, assumes that proceeds (net of transaction costs) of $194 million were used to retire debtthat had an interest rate of 5.5% and that the applicable tax rate is 34%. This would have led to a reduction in borrowing costs of $10,670,000 beforetax for the year ended 30 June 2001.

The 2001 proforma calculation of earnings per share assumes that the dividend on the Presses is at 6%. The definition of EBITDA is Earnings beforeInterest, Tax, Depreciation and Amortisation.

4.5 Credit rating of PRESSESFairfax and the Presses have each been rated by Standard & Poors. As at the date of this Prospectus the ratings are asfollows:

Presses issue credit rating (issued 1 November 2001)

Standard & Poors BBB

Fairfax corporate credit rating (affirmed 1 November 2001)

Standard & Poors BBB+/Stable/A-2

These ratings may change over time depending on the financial performance of Fairfax. If the Credit Rating falls below BBBor if Standard & Poors ceases to provide a Credit Rating to the Presses, holders of Presses will be entitled to an increaseddividend for the period during which the Credit Rating is below BBB or no rating is provided. This dividend will be at a ratewhich is 0.75% per annum higher than the Dividend Rate on the Presses and calculated in accordance with the formulacontained in the terms of issue. For the avoidance of doubt, an announcement of any negative outlook or credit watch isnot taken to be a fall below BBB.

A credit rating is not a recommendation to buy, sell or hold securities and it may be subject to revision, suspension orwithdrawal at any time by Standard & Poors.

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12

5. RISK FACTORS

Before applying for Presses, youshould consider whether the Pressesare a suitable investment for you.

In particular, you should be awarethat there are risks associated withan investment in Presses, many ofwhich are outside the control ofFairfax, including the risk factors setout below and other matters referredto in this Prospectus.

5.1 Risks associatedwith investing inPresses

Set out below are specific risksassociated with an investment in

Fairfax Presses. In particular theserisks arise from the nature ofinvestment markets generally andas a result of the Presses and theirterms of issue.

Financial market conditions

The market price of Presses willfluctuate due to various factors,including general movements in theAustralian and international equitymarkets, investor perceptions, world-wide economic conditions, interest

rates, movements in the market priceof Fairfax Ordinary Shares, and factorswhich may affect Fairfaxs financialposition and earnings.

The market price of Presses isexpected to be more sensitive thanOrdinary Shares to changes in interestrates. Generally speaking, in theabsence of other considerations, anincrease in the level of relevant interestrates, after the allotment date, is morelikely to adversely affect the marketvalue of the Presses. The Pressescould trade on the ASX at a pricebelow the issue price.

Also, significant events, such as theterrorist attacks on the United Stateson 11 September 2001, and anysubsequent military activity in responseto those attacks, may have a materialimpact on such factors.

The Ordinary Shares held as a resultof any Exchange would, followingExchange, rank equally with Fairfaxsfully paid Ordinary Shares. Accordingly,their value after any Exchange Date will

depend upon the market price ofFairfax Ordinary Shares.

Liquidity

The market for Presses may be lessliquid than the market for Ordinary

Shares.

Dividends

Presses are not debt instruments, anddividends are not the same as interestpayments.

Payment of dividends on the Pressesis subject to the Directors resolvingto pay a dividend and there being noimpediment under the Corporations Actto the payment. Dividends are non-cumulative, and therefore if a dividendis not paid in any period, there is no

obligation on Fairfax to make it up inany subsequent periods. However,if a dividend is not paid then Fairfaxcannot pay a dividend to the holdersof Ordinary Shares or other preferenceshares (or redeem, cancel or acquireany share in Fairfax or conduct acapital reduction under which anyconsideration is paid or distributed)until Fairfax pays holders of Pressestwo consecutive dividends orotherwise makes up the shortfall (asexplained in the terms and conditionsin Appendix A).

Exchange

Either Fairfax or the holders of Pressesmay Exchange all or a portion ofthe Presses for Ordinary Shares onReset Dates and earlier in certaincircumstances. The Ordinary Sharesissued on Exchange will have thesame rights as other Ordinary Shares,which are different to the rightsattaching to Presses.

The number of Ordinary Shares

issued on Exchange will generallyvary depending on the Ordinary Shareprice over the 20 Business Daysimmediately prior to the ExchangeDate. The value of the Ordinary Sharesissued on the Exchange date maytherefore be different from the valuecalculated through the 20 BusinessDay pricing period. Further, if theaverage sale price of Ordinary Sharesover the 20 days prior to the ExchangeDate, or the price of Ordinary Shareson or after the Exchange Date, is lessthan $0.10, the value of OrdinaryShares issued on Exchange may beless than $102.56.

Fairfax may, subject to the terms,elect to Exchange at a time thatdoes not coincide with the holdersindividual preference, which may

be disadvantageous to them in lightof market conditions or individualcircumstances.

Ranking

Presses are not debt instruments.Consequently, upon any winding upof Fairfax, holders of Presses will rankbehind creditors of Fairfax and equallywith other preference shares, but inpriority to Ordinary Shareholders(unless already Exchanged intoOrdinary Shares) to the extent of the

face value of the Presses and anyaccrued dividend entitlement.

In the event of a shortfall of fundson a winding up, there is a risk thatholders of Presses will not receivea full return of capital or accrueddividend entitlement on the Presses.

Credit rating

As a result of extended poor marketconditions for Fairfax, there is a riskthat the credit rating of Fairfax and thePresses could be reviewed. Theseratings may change over timedepending on the financial performanceof Fairfax. If the Credit Rating fallsbelow BBB or if Standard and Poorsceases to provide a Credit Rating tothe Presses, holders of Presses willbe entitled to an increased dividendfor the period during which the CreditRating is below BBB or no rating isprovided. This dividend will be at a ratewhich is 0.75% per annum higher thanthe Dividend Rate on the Presses andcalculated in accordance with theformula contained in the terms of

issue. For the avoidance of doubt, anannouncement of any negative outlookor credit watch is not taken to be a fallbelow BBB.

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Taxation considerations andearly Exchange

A general outline of the taxation

consequences for investors in Pressesare set out in the letter by Greenwoods& Freehills Pty Limited to Fairfax inSection 6. This discussion is in generalterms and is not intended to providespecific advice in relation to thecircumstances of any particularinvestor. Accordingly, investors shouldseek independent advice in relation totheir own individual taxation position.

The Australian Government is inthe process of a major review ofthe business tax system, includingannounced intentions to introducelegislation dealing with the proposedconsolidation regime and thesimplification of the imputation system.Fairfax does not anticipate that theseproposed changes will adversely affectthe Presses. If a change to the systemmaterially increases the costs to theCompany of having the Presses onissue, or adversely affects the ability ofthe Company to frank any dividends onthe Presses, the Company is entitled toExchange the Presses for OrdinaryShares prior to the Reset Date.Therefore the exact period for which

investors are entitled to the specialrights attaching to the Presses isunknown. Investors should refer to theterms of issue set out in Appendix Afor further information.

Swap rate

The Dividend Rate to be paid onthe Presses will be determined withreference to the Swap Rate on theallotment of the Presses. Swap ratesare a commonly used benchmarkof the level of interest rates in an

economy, and are variable andinfluenced by economic factors.However, there is a minimumDividend Rate payable to investorsregardless of the actual Swap Rate.This is explained more fully in theterms and conditions in Appendix A.

Further issues of securities

Fairfax is entitled to issue furtherPresses or other securities that rankequally with Presses. However, beforeFairfax could issue any securities that

rank in priority to Presses it mustobtain a special resolution of theholders of Presses.

5.2 Risks associatedwith Fairfax

An investment in Presses also involves

the general risks associated with anyinvestment in securities which arelisted on a stock exchange.

Fairfaxs business is subject to riskswhich may impact on its futureoperations and performance. Inaddition to other information set outin this Prospectus, the following riskfactors should be considered carefullyin evaluating Fairfax and its businessbefore subscribing for Presses.

Dependence on general

economic conditions

Fairfaxs business may be affected bygeneral economic conditions (includinginterest rates, inflation, the industrialrelations environment, mortgage rates,oil prices, employment rates, GDP, andthe Australian dollar exchange rate).Changes in economic conditions in themarkets in which Fairfax operates mayresult in customers changing spendingpatterns or their level of generalconsumption, which may have amaterial adverse effect on the

Companys operating and financialperformance. Also, the repercussionsof the terrorist attacks in the UnitedStates on 11 September 2001,including the possibility of an escalationin military activity, may not yet befully reflected in market conditions.

Volatility of advertising revenues

Fairfaxs revenues are largelydependent on the demand for displayand classifieds advertising. Advertisingexpenditure is in itself dependent on anumber of factors including advertising

market conditions, GDP growth,employment levels and the overallgrowth in the Australian economy.

Newsprint prices

Fairfaxs business may be affectedby changes in the cost of newsprint.

The Company has entered intoarrangements for newsprint purchasingwhich limit the impact of fluctuationsin global newsprint prices and foreignexchange rates.

New technology

Although new technology such asthe Internet may have an impact onthe revenues of Fairfaxs corepublishing business these risks aremitigated by continuing growthprospects in publishing as well asopportunities in f2.

Growth of Internet usage ande-commerce

The future profits of f2, in part, dependupon the extent to which the Internetis accepted and used as an effectivemedium of commerce. Rapid growthin the use of and interest in theInternet and commercial onlineservices is a recent development.There can be no assurance that thisacceptance and use will continue todevelop such that a sufficient broad

base of consumers adopt, and continueto use, online services as a medium ofcommerce. Failure of this growth andacceptance could adversely affect thefuture performance of f2.

Industrial relationsstaff costs

The newspaper industry in Australiais labour intensive and the workforcelargely unionised. Consequently Fairfaxis sensitive to increases in wage levelsand experiences occasional industrialaction.

The above summary is not

exhaustive and prospective

investors should read thisProspectus in its entirety and

consult their stockbroker,accountant, financial or other

professional adviser before deciding

whether to apply for Presses.

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14 FairfaxPRESSES

6. TAXATION LETTER TO FAIRFAX


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15FairfaxPRESSES


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16 FairfaxPRESSES


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17FairfaxPRESSES


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18 FairfaxPRESSES


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19FairfaxPRESSES

7. ADDITIONAL INFORMATION

TERMS OF ISSUE

The rights attaching to Presses will begoverned by:

Fairfaxs constitution; and

The terms of issue of the Pressesset out in Appendix A.

At the Annual General Meeting ofFairfax to be held on 7 November2001, Shareholders will be asked toadopt a new constitution.

FAIRFAX A DISCLOSINGENTITY

Fairfax is a disclosing entity under

section 111AC(1) of the CorporationsAct and is therefore subject to regularreporting and disclosure obligationsunder the Corporations Act and theASX Listing Rules. These obligationsrequire Fairfax to continuously notifythe ASX of information about specificevents and matters as they arise forthe purpose of the ASX making theinformation available to the stockmarket conducted by the ASX. Inparticular, Fairfax has an obligationunder the ASX Listing Rules (subjectto certain limited exceptions), to

notify the ASX immediately of anyinformation concerning Fairfax, ofwhich it becomes aware, which areasonable person would expect tohave a material effect on the price orvalue of its shares. It is also requiredto prepare and lodge with ASIC bothyearly and half-yearly financialstatements accompanied by a Directorsstatement and report and an audit orreview report.

AVAILABILITY OF DOCUMENTSLODGED WITH ASIC

The Corporations Act provides for

separate content requirements fortransaction specific prospectuses inrelation to an offer of securities in aclass which have been continuouslyquoted for the 12 months prior to thedate of the prospectus. In thesecircumstances, a listed disclosing entitymay issue a short form prospectusunder section 713. The ability to issuea short form prospectus exists inrespect of an offer of Exchangeablepreference shares (which are notcontinuously quoted securities) underASIC Class Order 00/195 which

provides that a section 713 prospectuscan be issued where the ordinaryshares underlying the Exchangeablepreference shares are continuouslyquoted securities.

Copies of documents lodged in relationto Fairfax may be obtained from, orinspected at, an office of ASIC.

OTHER DOCUMENTS

Fairfax will provide a copy of any of thefollowing documents free of charge toany person who requests a copy during

the application period in relation to thisProspectus:

The financial statements of theGroup for the year ended 30 June2001 (being the most recentannual financial reports lodgedwith ASIC before the issue of thisProspectus), and

Any other document or financialstatement lodged by Fairfax withASIC or the ASX under thecontinuous disclosure reporting

requirements in the period afterthe lodgement of those financialstatements and before lodgementof this Prospectus with ASIC.

SUMMARY OF RIGHTSATTACHING TO PRESSES

The rights attaching to Presses aresummarised in Section 1. Full detailsof the rights attaching to Pressesare set out in the terms of issue atAppendix A.

SUMMARY OF RIGHTSATTACHING TO ORDINARYSHARES

The Ordinary Shares issued on Exchangeof Presses will rank equally withexisting fully paid Ordinary Shares. Therights attaching to Ordinary Shares are:

set out in Fairfaxs constitution(those rights will remainsubstantially the same under theconstitution to be considered byShareholders at the Annual GeneralMeeting on 7 November 2001)(each of these constitutions can beexamined from 8.30 am to 5.00 pmat Level 19, 201 Sussex Street,Sydney, New South Wales), and

in certain circumstances, regulatedby the Corporations Act, the ASXListing Rules and the general law.

The rights attaching to Ordinary Sharesare, in broad terms, summarised asfollows. This summary also applies tothe rights attaching to Ordinary Sharesunder the proposed new constitution:

Dividends

Dividends declared or resolved to be

payable by the Directors on OrdinaryShares are payable (except in limitedcircumstances) in proportion to theamount of capital credited as paid onthe Ordinary Shares during the periodin respect of which the dividend ispaid.

Voting

At any general meeting of Fairfax,each member has one vote on a showof hands and one vote for each shareheld on a poll.

Winding up

Ordinary Shareholders are entitledto share in any surplus assets on awinding up in proportion to the sharesheld by them, irrespective of theamounts paid or credited as paid onthe Ordinary Shares. Ordinary Sharesrank after Presses for return of capitalon a winding up.

Transferability

Ordinary Shares are generally freely

transferable, however, the Directorsmay decline to register a transfer inlimited circumstances.


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SUMMARY OF UNDERWRITINGAGREEMENT

Fairfax entered into an Underwriting

Agreement (UnderwritingAgreement) with UBS WarburgAustralia Limited (Underwriter) on1 November 2001. The main termsof the Underwriting Agreement aresummarised below.

Agreement to Underwrite andManage

Under the Underwriting Agreement,the Underwriter agrees to underwritethe issue of 2 million Presses at theIssue Price and to manage the Offer.Fairfax must accept all validapplications for the underwrittenPresses. The Underwriter, afterconsultation with Fairfax, has a rightto nominate the allottees of all theunderwritten Presses in its absolutediscretion. Fairfax may, in consultationwith the Underwriter, accept over-subscriptions of up to 500,000 Presseswhich are not underwritten, andnominate the allottees of thosePresses.

Representations, Warranties and

UndertakingsThe customary and usual warrantiesare given by both the Underwriter andFairfax in relation to matters such astheir respective status as companieslimited by shares, their legal capacityand power to enter into theUnderwriting Agreement, and theirrespective corporate authority.

The customary and usual warrantiesare given by Fairfax as an issuer ofshares in relation to matters such asFairfaxs compliance with all applicable

laws and obligations that apply to thisProspectus and material incidental tothis Prospectus, its conduct in relationto this Prospectus and the Offer, itsfinancial position, and its due diligenceprogram for the Offer.

Fees and Indemnities

Fairfax is required to pay to theUnderwriter:

a management fee of 0.75%;

a sales fee of 1.25%; and

an underwriting fee of 0.75%.

In addition, Fairfax is required to payvarious incidental costs and expensesincluding GST incurred by theUnderwriter in connection with theOffer. The Underwriter is entitled toset off any of the above fees, costsand expenses against any paymentit is required to make in respect of

Presses received by the Underwriter.

If the obligations of the Underwriterunder the Underwriting Agreementare terminated or the Offer does notproceed or is not completed for anyreason, Fairfax must pay to theUnderwriter its reasonable costsand expenses.

Fairfax gives certain indemnities to theUnderwriter and its related parties inrelation to losses suffered by, or claimsmade against, the Underwriter or itsrelated parties in connection with theUnderwriters appointment.

Termination

The Underwriter may terminate itsobligations under the Underwriting

Agreement by notice to Fairfax if,between 1 November 2001 and thedate on which a valid shortfall noticeand accompanying certificate are givento the Underwriter (Shortfall NoticeDate) any of the following mattersoccurs:

1 The All Ordinaries Index of the ASXeither:

(a) closes on 3 consecutiveBusiness Days at a level thatis 10% or more below itsclosing level on 31 October

2001 (Starting Level); or

(b) closes on a day which is lessthan 3 Business Days beforethe Shortfall Notice Date at alevel which is 10% or morebelow its Starting Level andcloses at that or a lower levelon each subsequent BusinessDay until and including theShortfall Notice Date; or

(c) is at any time at a level whichis 15% or more below its

Starting Level;

2 This Prospectus omits any materialrequired by the Corporations Act orotherwise fails to comply with theCorporations Act;

3 ASIC issues an order under section739(1) of the Corporations Act or aninterim order under section 739(3)of the Corporations Act;

4 Fairfax does not comply with arequirement to serve a certificateon the Underwriter regarding a

shortfall, or furnishes a certificatewhich is untrue or incorrect in amaterial respect;

5 ASX does not grant approval forofficial quotation of the Pressesbefore the Shortfall Application Dateor such approval is withdrawn on orbefore the Shortfall Application Date;

6 Fairfax fails to lodge the Prospectuswith ASIC on or before 5 November2001, except where this is the solefault of the Underwriter;

20 FairfaxPRESSES7. Additional information (continued)


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21FairfaxPRESSES

7 Except as disclosed in thisProspectus to the ASX prior to1 November 2001 in accordancewith the Listing Rules or to the

due diligence committee, there isa material adverse change in thefinancial position, results ofoperations or prospects of Fairfaxfrom that reflected in the financialstatements of Fairfax for the periodended 30 June 2001;

8 Any person who has previouslyconsented to the issue of thisProspectus or to being named inthis Prospectus (other than theUnderwriter) withdraws thatconsent;

9 Fairfax withdraws this Prospectus;

10 Trading in Ordinary Sharesis suspended for more than3 consecutive Business Days,or Ordinary Shares cease to bequoted on ASX;

11 The credit rating assigned to Fairfaxby Standard and Poors (Australia)Pty Ltd as at 1 November 2001 isdowngraded or withdrawn or isplaced on credit watch negative;

12 Trading in all securities quotedon ASX is suspended or limitedin a material respect for all orsubstantially all of a trading day;

or if any of the following mattersoccurs and the event has, or isreasonably likely to have, a materialadverse effect on the success of theOffer or leads or is reasonably likelyto lead to a liability for the Underwriterunder any applicable legislation:

13 Fairfax (or any of its subsidiaries)alters its share capital or itsconstitution in a material respectwithout the prior written consentof the Underwriter (which consentmust not be unreasonably withheld)except for the adoption of a newconstitution by Fairfax at its AnnualGeneral Meeting of 7 November2001;

14 Any of the following events isdelayed for more than five BusinessDays:

(a) Lodgement Date;

(b) Opening Date;

(c) Closing Date;

(d) Shortfall Date(the last date on which aShortfall Notice may be given);

(e) Shortfall Application Date(the latest date on whichapplications in respect of aShortfall may be lodged);

(f) Allotment Date;

(g) Holding Statement DespatchDate (the last date for holdingstatements to be despatched);

15 The Dow Jones Industrial AverageIndex falls in the same manner andto the same extent in percentageterms described in relation to theAll Ordinaries Index of the ASX inparagraph 1 above;

16 Fairfax fails to perform or observeany material obligation under the

Underwriting Agreement and thatfailure is not remedied to thereasonable satisfaction of theUnderwriter;

17 Any new Australian law orregulation is introduced intoParliament, made or foreshadowedin an announcement which, if itcomes into effect, could reasonablybe expected to have a materialadverse effect on the success ofthe Offer;

18 Without the prior written consent ofthe Underwriter (which shall not beunreasonably withheld), any of thematerial contracts summarised inthis Prospectus is terminated(whether by breach or otherwise),rescinded, altered or amended in amaterial respect or found to be voidor voidable;

19 Hostilities not presently existingcommence or a major escalation inexisting hostilities occurs, whetherwar has been declared or not,

involving any one or more of

Australia,

New Zealand,

the United States of America,

any member state of theEuropean Union,

Indonesia,

Japan,

Russia, or

the Peoples Republic ofChina,

or a terrorist act is perpetrated onany of those countries or anydiplomatic or political establishmentof any of those countries elsewherein the world, or a nationalemergency is declared by any ofthose countries;

20 A representation or warranty givenby Fairfax has been, is, or becomes,

materially untrue or incorrect andthe matters rendering therepresentation or warranty untrue insuch respect are not remedied tothe reasonable satisfaction of theUnderwriter;

21 Fairfax contravenes in a materialrespect any provision of itsconstitution, the Corporations Actor any requirement of ASX or anyother applicable law;

22 A director of Fairfax:

(a) is charged with an indictableoffence relating to anyfinancial or corporate matteror any regulatory bodycommences any public actionagainst the director in his orher capacity as a director ofFairfax or announces that itintends to take any suchaction; or

(b) is disqualified from managinga corporation under sections206B, 206C, 206D, 206E,

206F or 206G of theCorporations Act;


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23 A supplementary prospectus or areplacement prospectus is, in thereasonable opinion of theUnderwriter, required under section

719 of the Corporations Act or aperson other than the Underwritergives a notice to Fairfax underSection 730 of the CorporationsAct;

24 Trading in all securities quotedor listed on the New York StockExchange is suspended or limitedin a material respect for all orsubstantially all of a trading day;

25 A general moratorium is declaredon commercial banking activities

in Australia or the United States ofAmerica and remains in force fortwo consecutive Business Daysor there is a material disruption incommercial banking or securitysettlement or clearance servicesin either of those countries whichremains in force for twoconsecutive Business Days(Banking Moratorium Event);

If a Banking Moratorium Event occurswhich does not entitle the Underwriterto terminate its obligations under theUnderwriting Agreement, but whichprevents or delays the performance ofcertain specified obligations of Fairfaxor the Underwriter under theUnderwriting Agreement, thoseobligations will be suspended to theextent to which they are affected, foras long as the Banking MoratoriumEvent continues. If the BankingMoratorium Event continues for morethan 7 days, the Underwriter mayterminate the Underwriting Agreement,without cost or liability to theUnderwriter, by notice to Fairfax.

In the event that the Underwritervalidly terminates its obligations, it isrelieved of its obligations under theUnderwriting Agreement, other thanin respect of any obligation which mayhave already accrued.

RESIDENTS OF THEUNITED STATES

The Offer has not been and will not

be registered under the United StatesSecurities Act of 1933, as amended,(the Securities Act) and, therefore,subject to certain exceptions, thePresses may not be offered, sold,renounced or delivered, directly orindirectly, within the United States.Accordingly, except as describedbelow, the Offer is not being madein the United States or to holdersof Ordinary Shares with registeredaddresses in the United States andneither the Prospectus nor theApplication Form will be sent into

the United States or to persons withregistered addresses in the UnitedStates. Certain exemptions from theselimitations may be available in thecase of certain defined classes ofsophisticated investors.

Envelopes containing ApplicationForms should not be postmarked orotherwise despatched from the UnitedStates and all persons subscribing forthe Presses must provide addresseswithin Australia for the return ofholding statements for Presses. TheCompany reserves the right to treat

as invalid any Application Form (i)postmarked in or which otherwiseappears to have been despatchedfrom the United States, (ii) thatprovides an address in the UnitedStates for delivery of holdingstatements for Presses or (iii) which,except as otherwise agreed with theCompany, does not make therepresentation and warranty set out inthe Application Form that the personacquiring the Presses is not in theUnited States and is not acting for theaccount or benefit of a person within

the United States, unless the acceptingperson is so acting as an authorisedemployee of such other person or withinvestment discretion with respect toan account of such other person.

Any person who is unable to make therepresentation and warranty set out inthe Application Form is not entitled tosubscribe for any Presses.

Until 40 days after the commencementof the Offer, an offer, sale or transfer ofPresses within the United States by anydealer (whether or not participating in

the Offer) may violate the registrationrequirements of the Securities Act.

For the purposes of this Prospectusand the Application Form, UnitedStates means the United States ofAmerica, its territories andpossessions, any State of the UnitedStates and the District of Columbia.

RESIDENTS OF OTHERJURISDICTIONS

The Offer will only be made in

jurisdictions outside Australia ifthe making of the Offer does notcontravene any applicable laws inthe relevant jurisdiction in relationto the Offer.

Residents of those jurisdictions willonly be able to apply for Presses if theOffer can be made to them in such away as to comply with all applicablelaws in the relevant jurisdiction inrelation to the Offer.

CONSENTS

None of the parties referred to belowhas made any statement that isincluded in this Prospectus or anystatement on which a statement madein this Prospectus is based, other thanas specified below. Each of theseparties, to the maximum extentpermitted by law, expressly disclaimsand takes no responsibility for anystatements or omissions from thisProspectus, other than the referenceto its name and a statement or reportincluded in this Prospectus with theconsent of that party as specified

below.

Computershare Investor Services PtyLimited has given and has not, beforethe lodgement of this Prospectus withASIC, withdrawn its written consent tobe named in this Prospectus in theform and context in which it is named.

227. Additional information (continued)

FairfaxPRESSES


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23FairfaxPRESSES

Freehills has given and has not, beforethe lodgement of this Prospectus withASIC, withdrawn its written consent tobe named in this Prospectus in the

form and context in which it is named.

Ernst & Young has given and hasnot, before the lodgement of thisProspectus with ASIC, withdrawn itswritten consent to be named in thisProspectus in the form and contextin which it is named.

UBS Warburg has given and hasnot, before the lodgement of thisProspectus with ASIC, withdrawn itswritten consent to be named in thisProspectus in the form and context in

which it is named.

Greenwoods & Freehills Pty Limitedhas given and has not, before thelodgement of this Prospectus withASIC, withdrawn its written consentto the inclusion in this Prospectus of itsTaxation Letter to Fairfax in the formand context in which it is included (andto the references to that report in thisProspectus) and to be named in thisProspectus in the form and contextin which it is named.

UBS Warburg Private Clients Pty

Limited has given and has not, beforethe lodgement of this Prospectus withASIC, withdrawn its written consentto be named in this Prospectus in theform and context in which it is named.

Commonwealth Securities Limitedhas given and has not, before thelodgement of this Prospectus withASIC, withdrawn its written consentto be named in this Prospectus in theform and context in which it is named.

Johnson Taylor Potter Limited has

given and has not, before thelodgement of this Prospectus withASIC, withdrawn its written consentto be named in this Prospectus in theform and context in which it is named.

Standard & Poors has given and hasnot, before the lodgement of thisProspectus with ASIC, withdrawn itswritten consent to be named in thisProspectus in the form and contextin which it is named.

INTERESTS OF ADVISERS

Computershare Investor Services PtyLimited has performed work in its

capacity as Fairfaxs share registryin relation to the Offer. Fairfaxestimates that it will pay approximately$185,000 to Computershare in respectof this work.

Freehills has acted as solicitors toFairfax and has performed work inrelation to preparing the due diligenceand verification programme and inrelation to the due diligence requiredon legal matters. In respect of thiswork, Fairfax estimates that it will payapproximately $250,000 (excludingdisbursements and GST) to Freehills.Further amounts may be paid toFreehills for future work in accordancewith its normal time based charges.

Ernst & Young has performed work inrelation to the due diligence enquirieson financial matters and the preparationof the financial information in section 4of this Prospectus. In respect of thiswork, Fairfax estimates that it will payapproximately $35,000 (excludingdisbursements and GST) to Ernst &Young. Further amounts may be paid toErnst & Young for future work in

accordance with its normal time-basedcharges.

Greenwoods & Freehills Pty Limitedhas performed work in relation to thedue diligence inquiries on tax mattersand the preparation of the TaxationLetter in section 6 of this Prospectus.In respect of this work, Fairfaxestimates that $25,000 (excludingdisbursements and GST) toGreenwoods & Freehills Pty Limited.Further amounts may be paid toGreenwoods & Freehills Pty Limited

for future work in accordance withits normal time based charges.

UBS Warburg has acted as LeadManager and Underwriter for the Offer,in respect of which they are entitled toreceive fees and commissions underthe Underwriting Agreement asdescribed above in the summary of theUnderwriting Agreement.

Each of UBS Warburg Australia PrivateClients Pty Limited, CommonwealthSecurities Limited and Johnson TaylorPotter Limited has agreed to act as

Broker to the Offer.

In respect of this work, each will beentitled to a fee equal to 1.25% ofthe gross proceeds from the issueof Presses to their respective clients.

This amount will be paid by theUnderwriter.

Except as set out above, no:

person named in the Prospectusas performing a function inprofessional, advisory or othercapacity in connection with thepreparation or distribution of thisprospectus, or

Broker or underwriter to this Offer,

holds at this time of lodgement of thisProspectus with ASIC, or has held inthe two years before lodgement of thisProspectus with ASIC, an interest in:

the formation or promotion ofFairfax, or

any property acquired or proposedto be acquired by Fairfax inconnection with its formation orpromotion or the Offer, or

the Offer,

nor has anyone during that period paidor agreed to pay, or given or agreed togive, any benefit to such persons inconnection with the formation orpromotion of Fairfax or the Offer.


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247. Additional information (continued)

DIRECTORS INTERESTS

No Director or proposed Director holds,at the time of lodgement of this

Prospectus with ASIC, or has held inthe two years before lodgement of thisProspectus with ASIC, an interest in:

the formation or promotion of theCompany, or

any property acquired or proposedto be acquired by the Company inconnection with its formation orpromotion of the Offer, or

the Offer.

No one has, at the time of lodgement

of this Prospectus with ASIC, or in thetwo years before lodgement of thisProspectus with ASIC, paid or agreedto pay any amount, and no one hasgiven or agreed to give any benefit,to any Director or proposed Director:

to induce a person to become, orqualify as, a Director, or

for services provided by a Directoror proposed Director in connectionwith the formation or promotion ofthe Company or the Offer.

ASX WAIVERS

The ASX has granted Fairfax thefollowing waivers:

Listing Rule 3.20 has beenwaived so that Fairfax can use12 November 2001 as the recorddate for determining entitlementsto Shareholder priority allocationsrather than being required to giveASX seven Business Days noticeof the record date.

Listing Rule 7.1.4 has beenwaived so that the notional rate ofExchange of the Presses (for thepurposes of determining whetherthe issues of Presses under this

Offer will exceed 15% of capital)will be calculated using the marketprice of Ordinary Shares as at thetime the Company announcedits intention to issue the Presses.The effect of this waiver is that theissue of Presses will not requireshareholder approval under ListingRule 7.1.

Listing Rule 10.11 has been waivedso that Directors and related parties(as defined in the Corporations Act)can participate in the issue of

Presses without obtainingshareholder approval, provided thateach Director and his or her relatedparties are allotted no more than500 Presses and that this proviso isannounced to the market.

Listing Rule 7.40 has been waivedwith the effect that hard copies ofthis Prospectus may be despatchedto shareholders only 1 day prior to

the opening of the Offer, ratherthan the 10 Business Daysprescribed in Appendix 7A of theListing Rules. This waiver has beengranted on the condition thatFairfax gives at least 4 BusinessDays notice of the record date forshareholder priority participationunder the Offer and that thisProspectus is lodged with ASIC andposted on Fairfaxs website at least6 Business Days before theopening of the Offer.

The Company has also asked theASX to provide deferred settlementtrading in relation to the Offer asdescribed in Section 2.1.

ASIC MODIFICATIONS

ASIC has granted a modification of sub-section 711(3) of the Corporations Actto restrict the disclosures required bythat sub-section to the period of twoyears prior to the time of lodgementof the Prospectus with ASIC.

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Note:Defined terms used in this Appendix are set out inclause 9 below and in the Glossary to the Prospectus.

References to clauses and paragraphs in the text below

are clauses and paragraphs of this Appendix.

1 DescriptionThese are the terms of issue on which the Company willissue a number of $100 preference shares paying non-cumulative dividends with certain terms that periodicallyreset, as set out in these terms.

The issue price and face value of each of the Preferred ResetSecurities Exchangeable for Shares (Presses) will be$100 (Face Value).

2 Dividends

2.1 Dividends

(a) Subject to these terms including without limitationparagraph (c), the holder of each Presses is entitledto a Dividend in respect of each Dividend Period(Dividend Entitlement) calculated in accordancewith the following formula:

Dividend Entitlement =

Where:

N is the number of days in that Dividend Period; and

Dividend Rate is:

(1) for the period to 12 December 2006, the higherof:

(A) 6%; and

(B) the Swap Rate prevailing on the date thePresses are allotted plus a margin of 1%;and

(2) for the period after 12 December 2006 until andincluding the next Reset Date, and thereafterfrom each Reset Date to the next Reset Date,a rate expressed as a percentage per annum asspecified in accordance with clause 4.

(b) If any Dividend is not franked to 100% under Part IIIAAof the Tax Act (or any provisions that revise or replacethat Part), the amount of the Dividend will be calculatedin accordance with the following formula:

where:

D is the Dividend;

Ti is the Australian corporate tax rate applicable atthat time to the franking account of the Companyfrom which that Dividend will be franked,

expressed as a decimal; and

f is the Franking Rate applicable to that Dividend.

(c) If during any Dividend Period the Credit Ratingassigned by Standard & Poors to the Presses is belowBBB or the Credit Rating ceases to be assigned byStandard & Poors to the Presses at all, an amount

calculated in accordance with the following formula (theAdditional Dividend) will be added to the DividendEntitlement for that Dividend Period and the aggregateamount will be the Dividend Entitlement for thatDividend Period for the purposes of these terms:

Additional Dividend =

Where:

AM is the Additional Margin applicable at that time;and

AMN is the number of days during the Dividend Periodon which the Credit Rating was below BBB oron which the Presses were not assigned a CreditRating by Standard & Poors.

For the avoidance of doubt, if the Credit Rating of thePresses is BBB with any negative outlook or creditwatch, it will not be taken to be below BBB for thepurposes of this clause.

2.2 Payment of Dividend

The payment of a Dividend is subject to:

(a) the Directors, at their discretion, declaring the Dividendto be payable or otherwise resolving to pay the

Dividend; and

(b) there being no impediment under the Corporations Actto the Company paying the Dividend.

2.3 Non-Cumulative Dividends

The entitlement of a holder of a Presses to the paymentof a Dividend is non cumulative so that if, because of theprovisions of clause 2.2, a Dividend is not paid in respect of aDividend Period or the Dividend paid in respect of a DividendPeriod is less, than the Dividend Entitlement for that DividendPeriod, the holder has no claim in respect of that DividendEntitlement, or the balance of that Dividend Entitlement.

2.4 Calculation of Dividends

All calculations of Dividends will be to four decimal places.For the purposes of making any Dividend payment in respectof a holders aggregate Presses, any fraction of a cent will bedisregarded.

2.5 Dividend Payments

Subject to this clause 2, Dividends in respect of a DividendPeriod will be payable on a Presses in arrears on:

(a) 12 June 2002 and thereafter on each 12 December and12 June until the Presses are converted; and

(b) The date of conversion determined under clause 3(other than conversion under clause 3.2(b) wherea Dividend will not be payable).

AM x100 x AMN

365

D1 - [Ti x (1- f)]

Dividend Rate x $100 x N

365

25

APPENDIX A TERMS OF PRESSESFairfaxPRESSES


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26Appendix A Terms of Presses (continued)

2.6 Withholding Obligations

The Company will be entitled to deduct from any Dividendpayable to a holder the amount of any withholding or other

tax, duty or levy required by law to be deducted from it.Where any such deduction is made:

(a) the Company will pay the amount required to bededucted to the relevant revenue or collection authoritywithin the time allowed for such payment;

(b) the holder will be paid the balance of the Dividend afterallowance for the payment referred to in paragraph (a)above; and

(c) upon compliance by the Company with paragraphs (a)and (b) above, the holder will be deemed to have beenduly paid the Dividend by the Company.

2.7 Record dates

(a) A Dividend is only payable to those persons registeredas holders of Presses at the record date for Pressesholders in respect of each relevant Dividend, or in thecase of a dividend payable under clause 2.5(b), to thoseholders who have given notice to the Company toconvert those Presses.

(b) For the avoidance of doubt, a Shortfall Dividend is onlypayable to those persons registered as holders ofPresses at the record date in respect of the ShortfallDividend.

3 Conversion3.1 Meaning of Conversion

A Presses confers all of the rights attaching to one fully paidOrdinary Share but these rights do not take effect until5.00 pm Sydney time on the date of conversion determinedbelow. At that time:

(a) all other rights or restrictions conferred on that Pressesunder the terms of issue will no longer have effect(except for rights relating to a Dividend which is duebut has not been paid on or before the date ofconversion which will subsist); and

(b) that Presses will rank equally with all other fully paidOrdinary Shares then on issue and the Company willissue a statement that the holder of those shares holdsa share so ranking.

The taking effect of the rights of a Presses under this clauseand the allotment of additional shares under clause 3.6 is, forthe purposes of these terms of issue, together termedconversion. Conversion does not constitute cancellation,redemption or termination of a Presses or an issue, allotmentor creation of a new share (other than the additional sharesallotted under clause 3.6).

3.2 Conversion by the holder

Holders of Presses may require the Company to convert allor some of their Presses by giv

prospectus fairfax preferred reset exchang

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