In a lengthy announcement, BlackBerry has announced that it has changed the course of its current direction and has decided not to sell itself to Fairfax Financial as previously planned.
Instead, the company will now accept a $1 billion investment from the financial group due to the lack of financing faced by Fairfax in order to purchase the company as originally planned. As a result of the change in plans, BlackBerry will shuffle executives around and dismiss select board members, while replacing CEO Thorsten Heins, who will tender his resignation once the new deal closes.
Fairfax will install John S. Chen to serve as Executive Chair of BlackBerry’s Board of Directors and interim CEO while the company searches for a new chief executive. Chen will replace Heins, who will resign once the deal closes. Heins has been CEO since January 2012, when he replaced former co-CEOs Mike Lazaridis and Jim Balsillie while Prem Watsa of Fairfax will now take a seat on the BlackBerry board.
“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 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. We are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner.”
Currently, BlackBerry is working on releasing another high-end BB10 handset in the Z30 which will be a Verizon Wireless exclusive in the US and focusing on the recent multiplatform BBM rollout on iOS and Android, however the company is still treading water and the previous Fairfax deal was expected to serve as the lifeline for BlackBerry as a whole. Now with Plan B in a lesser valued investment and executive shuffle, the days may be numbered for both dedicated BlackBerry hardware and to a lesser extent, BB10 as a competing platform.
Update: In an interview to Reuters following the announcement, newly installed interim CEO John Chen has pledged to rebuild the company from its current state and expects the turnaround to span six full quarters. Chen has also confirmed plans to issue $250 million in convertible debt bonds for Fairfax Financial to purchase, while the remainder, to total $1 billion, will be issued via the usual channels. Chen also confirmed that the hardware business remains a priority for BlackBerry and that there are no plans to shut down that part of the company.