Post date: Nov 04, 2013 4:46:32 PM
Reuters Business Report - Put down your paddles. Just hours before the bidding deadline, BlackBerry called off its sale. It'll instead raise $1 billion from its lead investor and other institutional investors, and its CEO Thorsten Heins will step down.
Reuters had earlier reported that BlackBerry's biggest investor, Fairfax Financial led by financier Prem Watsa, had been struggling to raise money to put together a deal. Sources said several large banks had declined to participate because they felt BlackBerry couldn't get out of its hole. In September, the company reported a quarterly loss of nearly $1 billion after writing off its unsold Z10 phones on which the company had partially bet its future. Back in September, Fairfax had announced a tentative offer of $9 a share, valuing the company at $4.7 billion.
BlackBerry's shares, which had been down 35 percent this year, plunged further on the latest news.
BGC Partners analyst Colin Gillis said, "Now, we're back to the downward spiral. They've got $1 billion more cash that buys them time. The drumbeat of negativity is likely to continue. You hit the reset button, you've got an interim CEO. Time is not their friend."
Fairfax will buy one fourth of the $1 billion in convertible debt within the next two weeks. Former Sybase CEO John Chen will then serve as interim CEO until a permanent one is found.