BlackBerry Drops Sale Plans, Replaces CEO

(RTTNews) - Struggling smartphone maker BlackBerry Ltd. (BBRY, BB.TO), Monday dropped plans to sell itself and replaced its Chief Executive Thorsten Heins with John Chen as interim CEO. Shares of BlackBerry plummeted a near 17 percent on the Nasdaq, following the news.

Meanwhile, Fairfax Financial Holdings Ltd., which currently holds a 10 percent stake in Blackberry, backed off from its bid to buy the company and has instead agreed to to invest about $1 billion along with other institutional investors.

Waterloo, Ontario-based Blackberry replaced CEO Thorsten Heins, and has appointed John Chen as chair of board of directors and interim CEO. Fairfax head Prem Watsa will also be appointed to the board.

Heins joined Blackberry in January last year, and was expected to turn around the company from its current position to the once-held dominant position in the smartphone industry. However, his decisions and strategies failed as its much-anticipated Blackberry 10 operating system and new Z10 and Q10 smartphones failed to invoke the expected interest in customers.

BlackBerry had also announced plans to cut about 4,500 jobs - about 40 percent of its workforce, and reported a second-quarter loss of almost $1 billion, as tepid demand for Z10 led to hefty inventory charges.

Fairfax and other institutional investors will invest $1 billion in BlackBerry through a private placement of convertible debentures. Fairfax has agreed to buy $250 million worth of debentures. The names of other investors were not disclosed. The deal is expected to be completed within the next two weeks.

In September, Blackberry announced signina a letter of intent with Fairfax to sell itself for $9 a share or for $4.7 billion. However, Toronto-based Fairfax, whose due-diligence period concluded today, opted not to take the company private with borrowed money.

Barbara Stymiest, Chair of BlackBerry's Board, said, "The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders. This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position."

BBRY is currently trading at $6.46, down $1.31 or 16.89%, on the Nasdaq. On the Toronto Stock Exchange, Blackberry is trading at C$6.74, down $1.35 or 16.69%.