BlackBerry announces that the Fairfax deal has not materialized, and will instead seek a $1 billion in debt. CEO Thorsten Heins has been shown the door as the struggling handset manufacturer looks to recover lost ground.
Fairfax’s $4.7 billion takeover bid for BlackBerry has failed, and today it was announced that any possible takeover by other organizations is not on the cards. Today marked the finalization of due diligence on the offer that Fairfax made in August, but it fell through as the consortium was unable to procure the necessary $4.7 billion to close the deal.
Instead, Fairfax and other investors will lend BlackBerry $1 billion in debt, which can then be converted to stock in the future, with each share valued at $10. Currently, BlackBerry’s shares are hovering at the $6.33 mark. Fairfax will invest $250 million, and other financial institutions will contribute to the rest. This money will be used in restructuring. The need for additional financing is necessary as most of BlackBerry’s cash reserves were used in the $1 billion write-off it had to undertake on account of unsold inventory of the Z10.
Current CEO Thorsten Heins will be resigning today, and John S. Chen, former CEO of Sybase, will be acting as the interim CEO while the board of directors looks for a long-term successor. Chen is also the latest addition to BlackBerry’s board. Heins was made CEO of BlackBerry last January, and oversaw the releases of devices like the Z10, which failed to garner BlackBerry any significant consumer attention. Heins is set to receive $55.6-million in a severance deal.
Head of Fairfax financial, Prem Watsa, resigned from the BlackBerry board this year as talks of an imminent takeover began to surface. Since the deal fell through, it has been announced that Watsa will re-join the BlackBerry board, and continues to be one of the staunchest believers in the manufacturer.
“Fairfax is a long-time supporter, investor and partner to BlackBerry and, with this investment, reinforces its deep commitment to the future success of this company,” he said.
More details will likely be available through the week.