BlackBerry Ltd. (BB)’s biggest investor, Fairfax Financial Holdings Ltd. (FFH), is buying an additional $250 million in convertible bonds issued by the smartphone maker, a vote of confidence in new leader John Chen’s turnaround plan.
Fairfax, based in Toronto, is buying the bonds as part of an option from an earlier agreement and expects the transaction to be completed by Jan. 16, Waterloo, Ontario-based BlackBerry said in a statement. The option brings the total value of BlackBerry debentures Fairfax has bought to $500 million.
Fairfax is funding the smartphone maker’s attempt to reinvent itself after ceding market share in the past few years to Apple Inc. and Samsung Electronics Co. (005930) BlackBerry sold $1 billion in convertible bonds in November after Fairfax failed to secure the funds for a tentative $4.7 billion proposal to take BlackBerry private.
Chen, who joined BlackBerry as chief executive officer in November, has since replaced a handful of senior executives and also announced an agreement with Foxconn Technology Group to outsource production and design of BlackBerrys to cut costs.
BlackBerry shares gained less than 1 percent to $8.54 at the close in New York. The stock has gained 37 percent since the day before the Foxconn deal was announced in December.
Fairfax, an investment firm and insurer, owns 9.9 percent of BlackBerry’s shares. The 6 percent debentures, convertible at $10 a share, would increase that stake to 17.6 percent if no other debtholders used the instruments to obtain shares, Fairfax said today. If all the others did so as well, Fairfax’s stake would be 15.6 percent.
Other investors in the November convertible bond sale included Canso Investment Counsel Ltd., which contributed $300 million, and Mackenzie Financial Corp., which added $200 million. Qatar Holding LLC invested $100 million.
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