Blackberry No Longer For Sale, Company To Replace CEO
Waterloo-based smartphone pioneer BlackBerry Ltd. has been on something of a rollercoaster over the past few months. The struggling company had been expected to sell itself to Fairfax Financial Holdings Ltd., but the deal was cancelled amid rumours that Fairfax did not having the financial backing to complete the purchase.
The latest news is that BlackBerry is no longer for sale and is going with an unexpected new strategy: replacing its CEO and raising $1 billion from investors in a last chance effort to get back on its feet.
BlackBerry shares sharply dropped by 19% at the news that Fairfax was backing out of a deal to buy the company for $4.7 billion USD. Fairfax CEO Prem Watsa claims the decision to back out was reached after a consulting firm advised that purchasing BlackBerry with borrowed cash was not a wise financial move.
“To load this company with too much debt was not appropriate,” said Watsa. “We probably could do it, but we decided not to add high yield debt to the company’s structure.”
What does the future of BlackBerry look like?
Technology analyst Michael Walkley of Canaccord Genuity says that “a sale of BlackBerry is not longer imminent and few—if any—candidates remain to purchase the company in its entirety.” Walkley also suggested that BlackBerry is more likely to breakup than be sold as a whole.
However, Watsa insists that BlackBerry is not going to breakup thanks to a newly revised financial plan involving convertible financing. It is hoped that the financial structure will provide the company with enough time to stabilize.
In the meantime, industry veteran John Chen is taking over the role of interim leader of BlackBerry. Watsa will also remain heavily involved in BlackBerry’s future with his new role as lead director and chair of the compensation, nomination and governance committee.
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