BlackBerry has completed its strategic review without selling the business after Fairfax Financial Holdings’ US$4.7bn takeover offer fell through and other suitors did not follow up on their interest.
Fairfax’s offer agreed six weeks ago was…
BlackBerry has completed its strategic review without selling the business after Fairfax Financial Holdings’ US$4.7bn takeover offer fell through and other suitors did not follow up on their interest.
Fairfax’s offer agreed six weeks ago was contingent on it being able to persuade other investors to join a lending syndicate – something it failed to do.
A number of other potential buyers reportedly held discussions with the Canadian smartphone maker since the Fairfax deal was agreed, but a rescue deal has not materialised from those talks.
Instead BlackBerry has secured a US$1bn capital injection from Fairfax, which has a 10% stake in the company, and other institutional investors in the form of a private placement of convertible debentures.
BlackBerry will sell US$1bn of seven-year 6% unsecured subordinated debentures – US$250m of them to Fairfax – to be converted into BlackBerry common shares at US$10 per common share.
If all the debentures were converted they would equate to 16% of BlackBerry’s stock, the company said in a statement. In the 30 days following closing of the financing, the investors will have the option of acquiring a further US$250m in debentures, taking the total number of convertibles up to 19.2% of the stock.
Commenting on the financing, Barbara Stymiest, chair of BlackBerry’s board, said: “This financing provides an immediate cash injection on terms favourable to BlackBerry, enhancing our substantial cash position.”
After agreeing this transaction, set to close within the next two weeks, BlackBerry decided to end its strategic review which it launched in August. JP Morgan and Perella Weinberg have been advising BlackBerry on its future.
Heins resigns, Chen in
BlackBerry has also announced the departure of Thorsten Heins, its CEO who had been in the role since January 2012.
Upon the closing of debenture sale, John Chen, the former head of software company Sybase, will become executive chair of BlackBerry’s board. BlackBerry said he will be responsible for “the strategic direction, strategic relationships and organisational goals of BlackBerry”.
Chen will also become interim CEO until a permanent replacement for Heins is found. In a statement the new executive said a BlackBerry turnaround would “take time, discipline and tough decisions”.
Prem Watsa, chairman and CEO of Fairfax, is returning to the board after his failed takeover attempt. He will be appointed lead director and chair of the compensation, nomination and governance committee.
