2.2.0.7 false Debt Obligations and Preferred Shares Disclosure 00078 - Disclosure - Debt Obligations and Preferred Shares Disclosure true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 $ 2 Debt Obligations And Preferred Shares Disclosures Abstract 0 orh_DebtObligationsAndPreferredSharesDisclosuresAbstract orh false na duration No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string No definition available. false 3 Debt Obligations and Preferred Shares Disclosure 1 orh_DebtObligationsAndPreferredSharesDisclosuresTextBlock orh false na duration Text block disclosures related to the company's debt obligations and preferred stock outstanding. false false false false false false false false false false false terselabel false 1 false false false false 0 0 8. Debt Obligations and Preferred SharesDebt ObligationsThe components of the Company's debt obligations as of June 30, 2010 and December 31, 2009 were as follows (in thousands):<div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 12px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;"> </td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td colspan="2" style="width: 66px; text-align:center;border-color:#000000;min-width:66px;">June 30,</td><td style="width: 12px; text-align:center;border-color:#000000;min-width:12px;"> </td><td colspan="2" style="width: 76px; text-align:center;border-color:#000000;min-width:76px;">December 31,</td></tr><tr style="height: 12px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;"> </td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td colspan="2" style="width: 66px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:66px;">2010</td><td style="width: 12px; text-align:center;border-color:#000000;min-width:12px;"> </td><td colspan="2" style="width: 76px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:76px;">2009</td></tr><tr style="height: 21px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;">7.65%Senior Notes due 2013</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;">$</td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 224,855</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;">$</td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 224,833</td></tr><tr style="height: 19px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;">6.875%Senior Notes due 2015</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 124,609</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 124,569</td></tr><tr style="height: 19px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;">SeriesA Floating Rate Senior Debentures due 2021</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 50,000</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 50,000</td></tr><tr style="height: 19px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;">SeriesB Floating Rate Senior Debentures due 2016</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 50,000</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 50,000</td></tr><tr style="height: 19px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;">SeriesC Floating Rate Senior Debentures due 2021</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 40,000</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 64px; text-align:right;border-color:#000000;min-width:64px;"> 40,000</td></tr><tr style="height: 21px"><td style="width: 432px; text-align:left;border-color:#000000;min-width:432px;"> Total debt obligations</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:12px;">$</td><td style="width: 54px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:54px;"> 489,464</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;"> </td><td style="width: 12px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:12px;">$</td><td style="width: 64px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:64px;"> 489,402</td></tr></table></div>On November 28, 2006, the Company completed the private sale of $40.0 million aggregate principal amount of floating rate senior debentures, series C, due December 15, 2021 (the "Series C Notes"). Interest on the Series C Notes accrues at a rate per annum equal to the three-month London Interbank Offer Rate ("LIBOR"), reset quarterly, plus 2.50%, and is payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year. The Company has the option to redeem the Series C Notes at par, plus accrued and unpaid interest, in whole or in part on any interest payment date on or after December 15, 2011. For the six months ended June 30, 2010 and 2009, the average annual interest rate on the Series C Notes was 2.78% and 4.05%, respectively. On February 22, 2006, the Company issued $100.0 million aggregate principal amount of floating rate senior debentures, pursuant to a private placement. The net proceeds from the offering, after fees and expenses, were $99.3 million. The debentures were sold in two tranches: $50.0 million of series A, due March 15, 2021 (the "Series A Notes"), and $50.0 million of series B, due March 15, 2016 (the "Series B Notes"). Interest on each series of debentures is due quarterly in arrears on March 15, June 15, September 15 and December 15 of each year. The interest rate on each series of debentures is equal to the three-month LIBOR, reset quarterly, plus 2.20%. The Series A Notes are callable by the Company on any interest payment date on or after March 15, 2011 at their par value, plus accrued and unpaid interest, and the Series B Notes are callable by the Company on any interest payment date on or after March 15, 2009 at their par value, plus accrued and unpaid interest. For the six months ended June 30, 2010 and 2009, the average annual interest rate on each series of notes was 2.48% and 3.74%, respectively.During the second quarter of 2005, the Company issued $125.0 million aggregate principal amount of senior notes due May 1, 2015. The issue was sold at a discount of $0.8 million, which is being amortized over the life of the notes. Interest accrues on the senior notes at a fixed rate of 6.875% per annum, which is due semi-annually on May 1 and November 1.During the fourth quarter of 2003, the Company issued $225.0 million aggregate principal amount of senior notes due November 1, 2013. The issue was sold at a discount of $0.4 million, which is being amortized over the life of the notes. Interest accrues on the senior notes at a fixed rate of 7.65% per annum, which is due semi-annually on May 1 and November 1.As of June 30, 2010, the aggregate maturities of the Company's debt obligations, at face value, were as follows (in thousands):<div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 19px"><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 481px; text-align:left;border-color:#000000;min-width:481px;">Year</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td colspan="2" style="width: 66px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:66px;">Amount </td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td></tr><tr style="height: 21px"><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 481px; text-align:left;border-color:#000000;min-width:481px;">2013</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;">$</td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 225,000</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td></tr><tr style="height: 19px"><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 481px; text-align:left;border-color:#000000;min-width:481px;">2015</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 125,000</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td></tr><tr style="height: 19px"><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 481px; text-align:left;border-color:#000000;min-width:481px;">2016</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 50,000</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td></tr><tr style="height: 19px"><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 481px; text-align:left;border-color:#000000;min-width:481px;">2021</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; text-align:right;border-color:#000000;min-width:12px;"> </td><td style="width: 54px; text-align:right;border-color:#000000;min-width:54px;"> 90,000</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td></tr><tr style="height: 21px"><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td><td style="width: 481px; text-align:left;border-color:#000000;min-width:481px;"> Total</td><td style="width: 9px; text-align:left;border-color:#000000;min-width:9px;"> </td><td style="width: 12px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:12px;">$</td><td style="width: 54px; border-top-style:solid;border-top-width:1px;border-bottom-style:double;border-bottom-width:3px;text-align:right;border-color:#000000;min-width:54px;"> 490,000</td><td style="width: 26px; text-align:left;border-color:#000000;min-width:26px;"> </td></tr></table></div>As of both June 30, 2010 and December 31, 2009, the amortized cost of the Company's debt obligations was $489.5 million as reflected in the respective consolidated balance sheets. As of June 30, 2010 and December 31, 2009, the estimated fair value of the Company's debt obligations was $496.2 million and $503.6 million, respectively. The estimated fair value is based on quoted market prices of the Company's debt, where available, or if quoted market prices are not available, the fair value is estimated based on the fair value of debt similar to the Company's, and discounted cash flow calculations.On July 13, 2007, the Company entered into a $200.0 million credit facility (the "Credit Agreement") with Wachovia Bank National Association ("Wachovia"), KeyBank National Association and a syndicate of lenders. The original Credit Agreement provided for a five-year credit facility of $200.0 million, $100.0 million of which was available for direct, unsecured borrowings by the Company, and all of which was available for the issuance of collateralized letters of credit to support the Company's insurance and reinsurance business. As of June 17, 2009, the Credit Agreement was amended to explicitly permit the Company to pledge collateral to secure its obligations under swap agreements, subject to certain financial limitations, in the event that such collateral is required by the counterparty or counterparties. As of February 24, 2010, the Credit Agreement was amended (i) to reduce the size of the facility to $100.0 million, removing the unsecured $100.0 million tranche, (ii) to remove the previous limitation on dividends and other "restricted payments" that the Company may pay to its shareholders and (iii) to amend certain of the covenants and default provisions, the minimum ratings requirement, and the pricing of the credit facility. The amended Credit Agreement contains an option that permits the Company to request an increase in the aggregate amount of the facility by an amount up to $50.0 million, to a maximum facility size of $150.0 million. Following such a request, each lender has the right, but not the obligation, to commit to all or a portion of the proposed increase. As of June 30, 2010, there was $33.7 million outstanding under the Credit Agreement, all of which was in support of secured letters of credit.In December 2008, the Company entered into interest rate swaps, with an aggregate notional value of $140.0 million, to protect it from adverse movements in interest rates. Under these swap contracts, the Company receives a floating interest rate of three-month LIBOR and pays a fixed interest rate of 2.49% on the $140.0 million notional value of the contracts, for a five-year period ending in December 2013.On July 20, 2010, Fairfax announced that the Company had received the requisite consents for the consent solicitation commenced on July 7, 2010 relating to the Company's 7.65% senior notes due 2013 and its 6.875% senior notes due 2015. The consent solicitation amended the financial reporting obligations of the Company to the holders of these senior notes and to the indenture trustee, as set forth in the supplemental indenture dated as of July 21, 2010.Preferred SharesDuring the second quarter of 2010, Odyssey America purchased 29,500 shares of the Company's Series B preferred shares, with a liquidation preference of $0.7 million, for $0.7 million. As a result of the purchase of the Series B preferred shares, the Company recorded a gain of $4.0 thousand during the three and six months ended June 30, 2010, which was reflected in the Company's retained earnings and included in net income available to common shareholders.During the first quarter of 2009, Odyssey America purchased 704,737 shares of the Company's Series B preferred shares, with a liquidation preference of $17.2 million, for $9.2 million. As a result of the purchase of the Series B preferred shares, the Company recorded a gain of $8.0 million during the six months ended June 30, 2009, which was reflected in the Company's retained earnings and included in net income available to common shareholders.  8. Debt Obligations and Preferred SharesDebt ObligationsThe components of the Company's debt obligations as of June 30, 2010 and December 31, 2009 were as false false false us-types:textBlockItemType textblock Text block disclosures related to the company's debt obligations and preferred stock outstanding. No authoritative reference available. false 1 2 false UnKnown UnKnown UnKnown false true