In a dramatic turn of events at embattled smartphone maker BlackBerry, Thorsten Heins announced he is standing down as chief executive as a proposed takeover bid for the company fell through.
In late September, a consortium led by Canadian investment tycoon Prem Watsa’s Fairfax Financial launched a $US4.7 billion takeover bid for the embattled smartphone maker.
The company had previously announced the creation of a special five-member committee to look at possible sale options for the embattled smartphone maker, with directors hoping to wrap up any sale by November.
However, reports surfaced yesterday that Watsa was struggling to raise the capital to finance his takeover bid, with several large lenders reportedly turning down the consortium over concerns about BlackBerry’s long-term viability.
Meanwhile, although co-founder Mike Lazaridis was widely expected to launch a rival takeover bid, an offer from his camp also failed to materialise.
With the deadline for takeover bids due, Fairfax Financial announced the takeover bid is off, with Watsa instead opting to loan the company $US1 billion through convertible debentures.
After a seven-year term, the debentures will convert into common shares of the company at a price of $US10 per share, representing 16% of the company after conversion.
The investment from Watsa will give the company a financial shot of in the arm after its horror results during the second fiscal quarter, when losses came in at $US965 million and revenues crumbling to just $US1.6 billion, down 45% year-on-year and 49% quarter-on-quarter.
The deal will also see Prem Watsa become rejoin the board of directors, becoming the company’s lead director, while Heins will step down both as chief executive and as a director, while David Kerr will also resign from the board.
“I look forward to rejoining the BlackBerry Board and to working with the other directors and management team, under John Chen’s leadership, to shape the next stage of BlackBerry’s strategy and growth,” Watsa says.
Blackberry has also named Disney director and former Sybase chief executive John Chen as interim chief executive officer and executive chair of its board of directors.
“BlackBerry is an iconic brand with enormous potential – but it’s going to take time, discipline and tough decisions to reclaim our success. I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees,” Chen says.
As SmartCompany previously reported, Heins is set to receive a $US22 million golden parachute, significantly less than the $US55.6 million he would have received had the company been sold.