BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) announced recently that it was abandoning the go-private plan offered by Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF) and opting to take $1 billion in debentures. The company has announced that it has finished the private placement of those debentures with Fairfax and a number of additional institutional investors.
BlackBerry’s filing reveals completion of the placement
Those who bought the debentures in the first round will have the option to purchase $250 million more of them in 30 days if they wish. BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s filing with the Securities and Exchange Commission revealed that it had completed the first round of filings. BMO Capital Markets was the only placement agent for those debentures.
The struggling Canadian company plans to use those debentures for “general corporate purposes.” Aside from Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF)’s purchase of $250 million in debentures, Mackenzie Financial purchased $200 million of them. Canso Investment Counsel bought $300 million worth, while Qatar Holding bought $100 million. Brookfield Asset Management bought $10 million.
The original offer was brought by a consortium led by Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF), although while it was still pending, the names of the other firms were not revealed. Now thanks to this new regulatory filing, we know that these firms had a subscription agreement with BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) dating back to Nov. 4, which was when the consortium’s tentative offer expired.
Will the debentures help BlackBerry?
Most analysts agree that the debentures is nothing but a stop-gap and that BlackBerry needs to figure out what it is going to do, and soon. The go-private offer would have been a far safer bet and would have enabled the struggling company to get thing together without the watchful eyes of investors. However, financing appeared to be an issue for the consortium as banks were apparently not interested in taking the significant risks associated with lending against a company as fragile as BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is right now.
The debentures may only delay the inevitable, unless BlackBerry’s new CEO John Chen is able to do a swift turnaround at the company. Unfortunately for the company, however, he’s faced with an uphill battle as more and more enterprise customers abandon BlackBerry because of how uncertain the company’s future is.