WATERLOO and TORONTO – BlackBerry has scrapped plans for a sale, choosing instead to replace CEO Thorsten Heins and raise U.S. $1 billion from majority shareholder Fairfax Financial Holdings Limited and other institutional investors.
According to a company announcement on Monday, the organizations will invest in BlackBerry through a private placement of convertible debentures, and Fairfax has agreed to acquire U.S. $250 million principal amount of the debentures. The transaction is expected to be completed within the next two weeks.
Upon the closing of the transaction, John Chen will be appointed executive chair of BlackBerry's Board of Directors and, in that role, will be responsible for the strategic direction, strategic relationships and organizational goals of the company. Chen was formerly chairman and CEO of Sybase Inc.
Prem Watsa, Chairman and CEO of Fairfax, will be appointed lead director and chair of the compensation, nomination and governance committee. Thorsten Heins and David Kerr intend to resign from the Board at closing. The announcement marks the conclusion of the review of strategic alternatives announced last August.
"Today's announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors," said Barbara Stymiest, chair of BlackBerry's board, in a statement. "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.
“This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs."
