A 13D filing yesterday by Prem Watsa’s Fairfax Financial Holdings Ltd (TSE:FFH) provides details of the investors putting up $1B for an investment in beleaguered handset maker and BBM service provider, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).
Blackberry had no choice but to go along with this financing route after it failed to find buyers for itself. On the other hand, Fairfax Financial Holdings Ltd (TSE:FFH) was unable to implement its C$4.7B plan to take Blackberry private.
The investment pie
|Name of Purchaser||US$/M|
|Fairfax Financial Holdings Limited|
|Mackenzie Financial Corporation|
|Canso Investment Counsel Ltd.|
|Brookfield Asset Management Inc.|
|Qatar Holding LLC|
About these investors
Mackenzie is a member of the IGM Financial Inc. (TSE:IGM) group of companies. IGM Financial Inc. (TSE:IGM) is one of Canada’s premier financial services companies with over $121.98 billion in total assets under management. Canso Investment Counsel Ltd. provides portfolio management services to institutional and private investors. Founded in 1997, it is a private company that is owned by its investment professionals. Markel Corporation (NYSE:MKL) is the holding company for a number of insurance and investment operations around the world. Based in Richmond, Virginia and founded in 1930, Markel is organized around five insurance segments offering solutions to complex risk challenges. Brookfield Asset Management Inc. (NYSE:BAM) (TSE:BAM.A) is a global alternative asset manager with AUM of over $175B. Qatar Holding LLC is based in Doha, Qatar and operates as a subsidiary of Qatar Investment Authority. It is a private equity firm specializing in strategic and direct investments in strategic private and public equity.
In return for the billion dollars, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will issue 6% unsecured, subordinated convertible debentures to the above investors. Fairfax has the option to arrange for an investment of another $250M within 30 days of the closing date of the investment agreement. Blackberry will use the proceeds for ‘general corporate purposes.’
Board positions of BlackBerry
John Chen would be appointed as the Executive Chair of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) and as a director. His key responsibilities include control over strategic direction, strategic relationships, and organization goals of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) and authority over hiring, retention, duties, and responsibilities of all officers, executives and other employees.
Prem Watsa would be appointed as the lead director of the company and the Chair of the Compensation, Nomination and Governance Committee of the Board.
John Chen’s remuneration
Chen would be paid a cash compensation by way of base salary of $1,000,000 and performance bonus of 200% of base salary, or $2,000,000. In addition, he would receive equity compensation of 13,000,000 restricted share units (~2.0% fully-diluted for $1.25bn convert), vesting over five years in stages.
Outgoing CEO Thorsten Heins, who had barely two years at the helm, is likely to receive $22M in severance payments and other compensation.