Waterloo, Ontario – Embattled smartphone maker BlackBerry took itself off the market but will raise $1 billion from institutional investors and is getting new leadership.
BlackBerry took itself off the market after a consortium led by Fairfax Financial Holdings did not finalize a tentative bid to take the company private. Today was also the deadline for receiving any competing bids, which apparently also did not materialize.
“This investment replaces the previous bid that Fairfax extended to BlackBerry,” a spokesperson told TWICE. “This also concludes BlackBerry’s strategic review.”
Barbara Stymiest, BlackBerry’s chairwoman, said the decision followed “a thorough review of strategic alternatives” and that the board “pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders.” The new financing “provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position,” she said.
Fairfax, which already owns about 10 percent of BlackBerry shares, will be among the companies investing the $1 billion. The transaction, expected to close in two weeks, takes the form of unsecured subordinated debentures convertible into common shares priced at $10, a 28.7 percent premium over the company’s closing share price on Nov. 1. The debentures’ term is seven years.
When the transaction closes, John Chen will be appointed executive chair of BlackBerry’s board and “be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry,” the company said. Chen previously served as chairman and CEO of Sybase and is currently a director of Wells Fargo & Company and The Walt Disney Company.
CEO Thorsten Heins will step down as CEO at the closing, and Chen will serve as interim CEO until a search for a new CEO is completed.
In addition, Prem Watsa, Fairfax chairman/CEO of Fairfax, will be appointed lead director and chair of the compensation, nomination and governance committee. Heins and David Kerr will resign from the board at closing.