BlackBerry says Fairfax to buy $250 million more debentures
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[January 09, 2014]
TORONTO (Reuters) — Fairfax Financial
Holdings Ltd will buy another $250 million worth of BlackBerry Ltd's
convertible debentures, the companies said Wednesday, providing the
struggling smartphone maker with much-needed cash.
The move by Fairfax, the Canadian property and casualty insurer run
by investment guru Prem Watsa, will double the company's holdings of
BlackBerry's debt. Fairfax also owns a more than 14 percent equity
stake in BlackBerry, making it the company's largest shareholder.
Fairfax is exercising a previously announced option linked to
BlackBerry's recent $1 billion debt financing, in which it had
initially bought $250 million.
Other backers of the initial offering included an arm of Qatar's
sovereign wealth fund, Brookfield Asset Management, and Markel Corp.
Canso Investment Counsel Ltd had bought $300 million.
The offering followed an aborted attempt by BlackBerry to sell
itself amid spiraling losses and shrinking market share in the
brutally competitive smartphone industry.
The Waterloo, Ontario-based company last month reported a massive
quarterly loss as its newest devices have failed to catch on.
Before the deal BlackBerry carried no debt. Analysts noted the debt
investment strengthened Fairfax's influence over BlackBerry, but
offered less downside risk than an increased equity investment would
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The debentures pay a 6 percent coupon. The private placement could
eventually increase the number of BlackBerry shares by almost 20
After excusing himself from BlackBerry's board during its failed
sale process after submitting a bid, Fairfax's Watsa rejoined as
lead director and head of its compensation committee when the
initial offering was announced.
(Reporting by Allison Martell and
Alastair Sharp; editing by Bernard Orr)
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