WATSA's REPUTATION TARNISHED BY QUEBEC JUDGE RULINGOctober 4, 2019 Mr. Paul Rivett Chief Legal Officer Fairfax Financial Holdings Limited 95 Wellington Street West Suite 800 Toronto, Ontario, Canada M5J 2N7 Mr. Rivett: In referece to September 30, 2019 Bloomberg's Doug Alexander article Watsas Mindboggling Reasoning in Takeover Prompts Court Award *** You dare to say that : Thedecision distorts the facts, does not make business sense and unfairly characterizes Mr. Watsas testimony, said Paul Rivett, Fairfaxs president. All of Mr. Watsas statements were true and Fairfax acted throughout with honesty and integrity. We expectthat the ruling will be appealed. *** I would be extremely surprised that you would have the guts to appeal this judgment. How can a judge come to these disturbing comments about the neglectful behaviour of Mr. Watsa when the said judge heard Mr. Watsa's Court testimony live? You really have to be kidding or being a fool of yourself Mr. Rivett to even think of discrediting thejudge about those troublesome allegations. By what possible means can you achieve this? That being said, i was a FIBREK INC. shareholder at the time of the RESOLUTE FOREST PRODUCTS takeover and it was clear as events took place that Mr. Watsa was pulling thestrings in this case in a very ackward way. I am not being rewarded by this judgment but appreciate the outcome of some shareholders who will receive some benefits. The September 26, 2019 Quebec Superior Court's judgment, although maybe not of a Canada-wide awareness, is nevertheless tarnishing Mr. Watsa's reputation. He tried, but failed to take over BLACKBERRY. He was a loser with REITMANS. He managed a profit with TEMBEC. He is under the water with TORSTAR, which company i hopehe will not mess around with. Luc Proulx *** Watsas Mindboggling Reasoning in Takeover Prompts Court Award Doug Alexander, Bloomberg News (Bloomberg) -- Canadian investor Prem Watsa was purposely forgetful and offered a mindboggling explanation in court testimony explaining why he backed a low-ball bid for a pulp mill in a sale to Resolute Forest Products Inc., a Montreal judge concludedin the seven-year-old case. Testimony by Watsa, chairman and chief executive officer of Fairfax Financial Holdings Inc., was so problematic it helped convince Montreal Superior Court Justice Michel Pinsonnault to award some Fibrek Inc. shareholders C$13.5 million ($10.2 million), plusinterest. Fairfax was in a blatant conflict of interest situation, the Quebec judge said in his Sept. 26 ruling. Watsas testimony was so vague and filled with so many uncertainties, unlikelihood, unsubstantiated denials and contradictions that it is very difficult for the court to give credence to the affirmations and explanations of the witness whose memory appearedto be failing on the most crucial aspects of his testimony, Pinsonnault said. A spokesman for Fairfax disputed the judges conclusions, and said the company may appeal. The decision distorts the facts, does not make business sense and unfairly characterizes Mr. Watsas testimony, said Paul Rivett, Fairfaxs president. All of Mr. Watsas statements were true and Fairfax acted throughout with honesty and integrity. We expectthat the ruling will be appealed. The case centered around Resolutes December 2011 offer for Fibrek. Fairfax was the most important shareholder and insider of both Fibrek and Resolute, according to the judgment, having helped both companies survive financial difficulties in 2010. Toronto-basedFairfax agreed to sell its 33 million shares to Resolute for C$1 apiece -- locking in a price that dissenting shareholders considered too low. The judge considered the fair value of Fibrek shares to be C$1.99, and found Watsas explanation for accepting less mindboggling. It was obvious to the court that the witness was a reluctant witness not pleased to have to testify at the request of the dissenting shareholders lawyers who had accused Fairfax of being complicit with Resolute in the abusive hostile take-over bid schemeto the detriment and prejudice of the dissenting shareholders, the judge said, adding that the court also found that Watsa often appeared to be on the defensive and when pressed on crucial factual elements, the witness hastily took refuge behind I do notremember or the like. Watsa had decided that Fairfax would sell its Fibrek stake in February 2011, but didnt want to do it on the open market, according to the ruling. So he seized the opportunity in May of that year to sell the stake to Resolute. The judge said the cash pricewas of no significance to Fairfax because it would convert the Fibrek shares into Resolute shares. The other shareholders were bound to a conveniently low cash price offered to and accepted by Fairfax, the judge said. Fairfax, whose holdings include insurance companies, media and BlackBerry Inc., is the largest shareholder of Montreal-based Resolute, whose shares have plunged 40% this year. --With assistance from Joe Schneider. To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scanlan, Chris Fournier 2019 Bloomberg L.P.