Fairfax Financial’s $4.7-billion deal to buy out BlackBerry is currently on hold, but the Toronto-based company has agreed to invest in the smartphone maker while it continues to be restructured.
In a statement made this morning, BlackBerry said they plan to raise $1 billion US in capital to help with the reconstructing.
BlackBerry plans to have a private placement of convertible debentures where Fairfax will invest $250 million, while unnamed institutional investors will subscribe to the rest.
These new developments this morning with Fairfax also meant that the CEO of BlackBerry, Thorsten Heins, will step down, and the CEO of Fairfax, Prem Watsa, will take on a new title of lead director and chair of compensation. In a statement, Watsa said, “Fairfax is a long-time supporter, investor and partner to BlackBerry and, with this investment, reinforces its deep commitment to the future success of this company.”
Furthermore, former Sybase Inc. CEO John Chen was hired as the interim CEO of BlackBerry to replace Heins.
Heins was named the CEO of BlackBerry — which was Research In Motion at the time — in January 2012 hoping that he could restore faith in the smartphone maker. The company lost close to $1 billion this quarter, and has laid off nearly 4,500 people. Heins is reported to receive $55.6 million in a severance package.
Chen made a statement saying he is looking forward to leading BlackBerry, but also noted, “It’s going to take time discipline and tough decisions to reclaim our success.”