BlackBerry to raise $1bn in bonds and seek new chief

BlackBerry Ltd, coping with the collapse of a $4.7bn buyout by Fairfax Financial Holdings, will raise $1bn in convertible bonds and seek a new chief executive officer for the struggling company.

BlackBerry shares fell as much as 18% after Fairfax abandoned the takeover plan, opting instead for a bond deal and management shakeup. Fairfax, BlackBerry’s largest investor, will invest $250m in the convertible debentures, according to a statement. CEO Thorsten Heins will step down, while former Sybase chief John Chen becomes executive chairman.

The transaction, slated to be completed later this month, follows a six-week attempt by Fairfax to attract financing for its buyout bid, which would have taken the smartphone maker private. The $1bn infusion will help stabilise the unprofitable company as it burns cash, though BlackBerry will still pursue other deals and is now more open to the idea of a breakup, people familiar with the matter said.

“The important thing is, what is the strategy?” said James Moorman, an analyst with S&P Capital IQ. “They have a chance, and have a little more runway with the additional cash, but they need to start making some smart decisions.”

BlackBerry shares fell as low as $6.40 in New York, sending the company’s market value below $3.5bn. The stock was already down 35% this year before yesterday’s tumble, as the company’s smartphones lost ground to Apple and Samsung Electronics.

Chen will become interim CEO while Waterloo, Ontario-based BlackBerry seeks a permanent replacement. The 58-year-old previously executed a comeback plan at Sybase, which was acquired by SAP for $5.8bn in 2010.

The move to raise funds from convertible debentures, which can be turned into stock, underscores BlackBerry’s deteriorating cash situation. The company’s cash and short-term investments fell by almost $500m last quarter to $2.3bn.

At that rate, the money will be gone by the end of next year. And further restructuring will only make the funds go faster, said Alexander Peterc, an analyst with Exane BNP Paribas.

BlackBerry’s latest phones got a tepid response from consumers, and even once-loyal customers are putting off upgrading to the new software.

Jabil Circuit, one of BlackBerry’s top electronics suppliers, said in September it will probably disengage from its relationship with the company. That’s raised speculation that BlackBerry will stop making phones.

— Bloomberg


Lifestyle

It won’t come as news to mothers-to-be that they are not eating for two, as the old saying goes, but the number of extra calories needed may come as a surprise. And it’s much fewer than you might think.Eating for two: It's quality not quantity of food that matters during pregnancy

No. It is such a small word, yet at times, something many of us find difficult to utter. The inability to say no to work, friends or family can cause so much stress in our lived lives.Learning Points: Just say no, there’s power in that little word

Fiona Kelleher has set some of the works of Múscraí poets Seán Ó Riordáin and Séamus Ó Céilleachair to music, writes Pet O'ConnellPoetry and music combine in reimagining of works of Seán Ó Riordáin and Séamus Ó Céilleachair

I fear I might be getting to that stage with my daughter Joan, who is 8, whereby I am the needy one! I fear I might be getting to that stage with my daughter Joan, who is 8, whereby I am the needy one!Mum's the word: I’m the needy one... I get the kiss off from my own daughter!

More From The Irish Examiner