BlackBerry completes $1 billion investment through debentures

Smartphone maker BlackBerry said it has concluded the private placement of debentures worth USD 1 billion with Prem Watsa-led Fairfax Financial Holdings and other institutional investors.

The investors also have an option to purchase additional USD 250 million worth of debentures in 30 days.

The struggling Canadian handset maker had earlier this month scrapped a sale plan and said it would instead raise as much as USD 1.25 billion through convertible debentures, which it intends to use for general corporate purposes.

In a regulatory filing to the US Securities and Exchange Commission (SEC), BlackBerry said: "It has completed the previously-announced USD 1 billion private placement of convertible debentures to Fairfax Financial Holdings Ltd and other institutional investors."

BMO Capital Markets acted as the sole bookrunner and sole placement agent for the private placement of the debentures, the filing, which was filed yesterday, it added.

"As previously announced, the investors have an option to purchase up to an additional USD 250 million principal amount of additional debentures within 30 days," the firm said.

In a previous SEC filing this month, BlackBerry said that Fairfax, which signed a tentative agreement in September to acquire it for USD 4.7 billion, will invest USD 250 million in convertible debentures. Fairfax holds 10 percent in the firm.

Besides, Mackenzie Financial Corporation will purchase debentures worth USD 200 million, Canso Investment Counsel (USD 300 million), Markel Corporation (USD 70 million), Brookfield Asset Management (USD 10 million), Qatar Holding (USD 100 million).

Fairfax, Mackenzie, Canso, Markel, Brookfield and Qatar Holding are termed as the 'Original Purchasers' the firms with which BlackBerry entered into a Subscription Agreement on November 4, 2013, the filing had said.

Once a dominant player in the handset market, BlackBerry has been loosing its market share to rivals, mainly Apple (iPhone), Google's Android-powered devices and Nokia's Windows Phone.

BlackBerry's net loss widened to USD 965 million in the second quarter ended August 31, from USD 235 million a year earlier, hit hard by inventory charges related to its latest offering Z10.

According to research firm IDC's latest July-September data, BlackBerry recorded the largest year-over-year decline among the leading operating systems.

In Q3, 2013, BlackBerry operating system shipments fell by 41.6 per cent to 4.5 million units from 7.7 million units in the year-ago period, it added.

"Underpinning its results was softer demand for its new BB10 operating system and continued demand for its older BB7 within emerging markets," IDC said.