Shares in BlackBerry collapsed to their lowest level in a decade after the smartphone maker abandoned hopes of finding a buyer and drew up a radical new investment scheme instead. The ailing company had planned to sell itself to its biggest shareholder, Canada’s Fairfax Financial Holdings, but the prospect of a rescue deal receded as Fairfax struggled to raise the funds needed to support its $9-a-share bid.
BlackBerry has now pegged its survival hopes on raising $1bn from institutional investors, including Fairfax, through a private placement of convertible debentures – a type of unsecured bond. Fairfax will invest up to $250m.
The smartphone maker will also replace its chief executive, Thorsten Heins, who spent two years trying to revive the company before admitting defeat and trying to find a buyer.
He will be replaced on an interim basis by John Chen, the former head of software firm Sybase, who is also joining BlackBerry’s board as executive chair, in charge of “strategic direction, strategic relationships and organisational goals”.
Mr Chen’s appointment was seen as a signal that BlackBerry would give up on its handset business, and focus on providing secure software for businesses – one of the company’s key strengths and the area where Mr Chen has most experience. However, the turnaround veteran said on Monday that he had no intention of shutting down BlackBerry’s devices unit.
"I know we have enough ingredients to build a long-term sustainable business. I have done this before and seen the same movie before,” he told Reuters. He added that he would shake up BlackBerry’s management team, with a slew of internal promotions and new appointments from outside the company.
Barbara Stymiest, chair of BlackBerry's board, said the new investment plan represented “a significant vote of confidence in BlackBerry and its future by this group of pre-eminent, long-term investors”.
Source: The Telegraph
