BlackBerry shares plummet as buyout collapses

The stock price falls nearly 13% Monday as CEO Thorsten Heins is ousted and a new business plan is unveiled.

By Forbes Digital Nov 4, 2013 12:28PM

BlackBerry (BBRY) was hoping for a rescue from its biggest shareholder by a Monday deadline, but the deal did not take the form investors were hoping for.

The device maker’s stock price plummeted nearly 13% Monday to $6.77.

The smartphone company will receive a $1 billion investment from Prem Watsa’s Fairfax Financial and other parties, in the form of convertible debentures, a loan that can be converted into stock down the road if a recovery takes shape.

Under the terms of the transaction, the $1 billion investment, which has a seven-year term, can be converted into BlackBerry common stock at $10 per share. If that comes to pass the investor group would own approximately 16% of the company.

The latest bid to save BlackBerry will come under new leadership though, as Monday’s announcement included the ouster of Chief Executive Thorsten Heins. The company announced former Sybase CEO John Chen, who is taking over as executive chairman, will serve as interim CEO. Watsa will be appointed lead director and helm the board’s committees on compensation, nominations and governance. will become interim chief and take over as chair of BlackBerry’s board.

The unsecured subordinated debt Watsa and his group are buying carries a 6% coupon, and provide significant upside if the stock price recovers though at the moment the $10 conversion price is substantially above the prevailing market price.

Shares of BlackBerry were already reeling with skeptics doubting the tentative $4.7 billion deal for Fairfax to buy BlackBerry at $9 per share. After the financing for that transaction proved elusive, shares dove Monday morning.

Speculation about the company’s fate have dominated headlines in recent months. Just this weekend reports that Chinese PC giant Lenovo was thinking about acquiring BlackBerry for $5 billion picked up steam when Lenovo’s CEO remarked about entering mobile. Last month news broke that BlackBerry co-founders Mike Lazaridis and Douglas Fregin had filed paperwork with the SEC seeking to regain control of the struggling company.

More on Forbes

Tags: BBRY
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

120
120 rated 1
265
265 rated 2
460
460 rated 3
719
719 rated 4
629
629 rated 5
629
629 rated 6
622
622 rated 7
437
437 rated 8
319
319 rated 9
116
116 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.