On Friday, Aug. 26, BlackBerry Ltd has announced its intention to raise around $605 million by selling convertible debt to various investors, including its own major shareholder Fairfax Financial Holdings Ltd.
BlackBerry Sells $605 MillionStock Convertible Debt
According to Reuters, the Canadian smartphone maker explained that in case that it would successfully convert all the $605 million of new debt into stock, it would represent as much as around 11.57 percent of the company's outstanding shares. The new debt that BlackBerry intends to issue will be due in Nov. 2020 and it will carry a coupon of 3.75 percent. Blackberry has also announced its intention to redeem around $1.25 billion worth of outstanding debt carrying a 6 percent coupon on Sept. 2.
Troubled smartphone maker BlackBerry plans selling convertible debentures to various investors, including its major shareholder Fairfax Financial Holdings, according to Fortune. With a stake in the company of around 8.9 percent, FairFax is BlackBerry's second largest shareholder. Fairfax Holdings is managed by well-known investor Prem Watsa.
Once a dominant force in smartphones, BlackBerry was once a dominant force in smartphones but now holds just a very small percent of the global market. Last month, the Canadian smartphone maker company said that it would stop producing its Classic model as it shifts focus to software. This move is raising serious doubts about the future of the BlackBerry's handset business.
The Canadian high-tech company unveiled in July a second Android-based handset, which combines security and productivity features with Alphabet's broad app catalog and popular software, all in a package offered at a lower price. According to BlackBerry Chief Executive John Chen, the company's downsized handset business is able to turn profitable by September. Tech and market analysts, however, have advised the company to shut down or sell the smartphone making unit.
After BlackBerry's announcement about its plans to sell stock convertible debt, the company's U.S.-listed shares in afternoon trading stayed little changed at $7.96.
