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Blackberry Ltd will be getting a 1- billion U.S. dollars injection instead of a direct buyout for now.
After weeks of deliberation to purchase the company for a price tag of 4.7- billion dollars, Fairfax Financial Holdings Ltd., the company's largest stakeholder, had up till Monday to complete its offer.
But Fairfax announced Monday morning that it will lead a group of unnamed institutional investors to raise 1 billion dollars in capital to help the troubled Canadian smartphone maker revamp its operations.
The money will be raised with a private placement of convertible debentures and Fairfax will take up 250 million U.S. dollars of the debentures, it said in a press release.
BlackBerry shares tumbled 1.10 Canadian dollars on the Toronto Stock Exchange on Monday, or 14 percent to 6.67 Canadian dollars apiece, after the news was released.
When the deal closes, John S. Chen, former CEO of Sybase Inc, will replace BlackBerry's Thorsten Heins, who was named CEO of the company back in January 2012, to take on the role of executive chair of the BlackBerry board.
This new plan will also see the return of chairman and CEO of Fairfax Prem Watsa, a former member on the Blackberry board who left this summer when it announced that it would consider selling the company as part of a strategic review. Watsa will be welcomed back onto BlackBerry's board as lead director and chair of compensation.
"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 release.
"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."
After losing much of its market share to Apple Inc's iPhone and other Android devices, BlackBerry announced in August that it was looking for a suitor, among other strategic options.
Besides Fairfax, social network Facebook, Chinese computer maker Lenovo and Microsoft were reportedly among those who considered a bid on BlackBerry.
