BlackBerry is changing plans and won't sell itself to Fairfax Financial

BlackBerry appoints new CEO as sale plan cancelled

BlackBerry has decided against selling itself and announced appointing a new CEO that will help the company raise $1bn (£0.63bn) in a bid to stop its continuous decline.

The plan to sell BlackBerry to its biggest shareholder Fairfax Financial Holdings, announced in September, has now been replaced with a proposition that expects its major shareholders to invest into the company’s revival, with Fairfax Financial itself believed to take up $250m of convertible debentures issues by BlackBerry.

The transaction will be completed in the next two weeks, which will also see the company’s CEO Thorsten Heins stepping down and being replaced by Sybase CEO John Chen, serving as an interim leader.

“BlackBerry is an iconic brand with enormous potential – but it’s going to take time, discipline and tough decisions to reclaim our success,” Chen said. “I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees.”

Barbara Stymiest, Chair of BlackBerry’s Board commented: “The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders,” she said, explaining the decision means the board is confident BlackBerry still has the potential to turn around the business.

“This financing provides an immediate cash injection on terms favourable to BlackBerry, enhancing our substantial cash position,” she said.    

Under the terms of the transaction, the purchasers will subscribe for $1bn aggregate principal amount of 6 per cent unsecured subordinated convertible debentures convertible into common shares of BlackBerry at a price of $10 per common share, a 28.7 per cent premium to the closing price of BlackBerry common shares on 1 November 2013.  The Debentures have a term of seven years.  Based on the number of common shares currently outstanding, if all of the U.S. $1 billion of Debentures were converted, the common shares issued upon conversion would represent approximately 16 per cent of the common shares outstanding after giving effect to the conversion.

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