Blackberry to get $1 bn private investment, Thorsten Heins to resign

Blackberry to get $1 billion private investment and Thorsten Heins, CEO, Blackberry plans to resign at the closing of the transaction.

BlackBerry today announced that it has entered into an agreement pursuant to which Fairfax Financial Holdings and other institutional investors will invest in BlackBerry through a $1 billion private placement of convertible debentures.

Fairfax has agreed to acquire $250 million principal amount of the Debentures and the transaction is expected to be completed within the next two weeks.

Under the terms of the transaction, Fairfax and other institutional investors will subscribe for $1 billion aggregate principal amount of 6 percent unsecured subordinated convertible debentures convertible into common shares of BlackBerry at a price of $10.00 per common share, a 28.7 percent premium to the closing price of BlackBerry common shares on November 1, 2013.

The Debentures have a term of seven years.  Based on the number of common shares currently outstanding, if all of the $1 billion of Debentures were converted, the common shares issued upon conversion would represent approximately 16 percent of the common shares outstanding after giving effect to the conversion.

Upon the closing of the transaction, John S 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 BlackBerry. Prem Watsa, chairman & CEO, Fairfax, will be appointed lead director and chair of the Compensation, Nomination and Governance Committee and Thorsten Heins and David Kerr intend to resign from the Board at closing.

In addition Chen will serve as interim chief executive officer pending completion of a search for a new chief executive officer.

“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.

“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, added Stymiest.

“I am also pleased that John Chen, a distinguished and proven leader in the technology industry, has agreed to serve as BlackBerry’s executive chairman. I look forward to continuing to serve BlackBerry as a member of its Board of Directors and chair of the Board’s Audit and Risk Management Committee. On behalf of the Board, I would also like to thank Thorsten for his service to BlackBerry over the past six years,” added Stymiest.

“I look forward to rejoining the BlackBerry Board and to working with the other directors and management team, under John Chen’s leadership, to shape the next stage of BlackBerry’s strategy and growth,” Prem Watsa, chairman and CEO of Fairfax.

“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,” added Chen.

The closing of the transaction is subject to customary conditions, including approval from the Toronto Stock Exchange.

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