BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares got killed in premarket trading after the company revealed that it wouldn’t sell itself after all. Shares declined more than 18% after the struggling company announced that instead of selling itself to the highest bidder, it would raise additional money from institutional investors. The company will also replace its CEO.

BBRY Blackberry Research in Motion

Fairfax to invest more in BlackBerry

The company announced that it will raise approximately $1 billion from institutional shareholders. Fairfax Financial, Prem Watsa’s firm, had been leading the original $9 per share go-private offer to buy BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). The company said it will raise the money through private placement of convertible debentures. Fairfax is taking on up to $250 million of those debentures.

The buyers of the debentures will subscribe for “$1 billion aggregate principle amount of 6% insecured subordinated convertible debentures.” They will be convertible into BlackBerry common shares for $10 per share, a 28.7% premium to the company’s closing price on Friday. The debentures have a seven-year term. If all of them were converted, then the common shares issued would represent about 16% of the outstanding common shares “after giving effect to the conversion.”

Today was Fairfax’s deadline for a deadline on BlackBerry

This morning’s announcement comes at an interesting time. The clock was ticking on BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s deal with Fairfax Financial Holdings Ltd (TSE:FFH). The deadline for the offer to become official rather than tentative was after the close of business today. On Friday it was reported that Fairfax was having problems securing financing for the $4.7 billion bid for the company.

This morning’s announcement also throws a wrench into the plans of any other bidders who were planning on making an offer today before the close of business. Cerberus and two of BlackBerry’s co-founders were among those said to be close to making a bid for BlackBerry.

BlackBerry replaces CEO

In addition to the sale of the debentures, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) also announced that Thorsten Heins will be stepping down as CEO at the closing of the sale, which is expected within the next two weeks. John S. Chen will become the new chairman of the board. Prem Watsa, Fairfax Financial Holdings Ltd (TSE:FFH)’s chairman and CEO, will become the Lead Director and Chair of the Compensation, Nomination and Governance Committee. Heins will also resign from the board, along with David Kerr.

Chen will serve as interim CEO until an official replacement for Heins is found. Chen was previously chairman and CEO of Sybase Inc.