UPDATE 5-BlackBerry calls off sale, spurring doubts and stock plunge

Mon Nov 4, 2013 4:26pm EST
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By Euan Rocha and Allison Martell

TORONTO Nov 4 (Reuters) - BlackBerry Ltd abandoned on Monday its plan to sell itself and said its CEO is stepping down, sparking a 16 percent dive in its share price and raising fears the struggling smartphone maker is running out of options.

After a two-month review of strategic options and talks with potential buyers that included Facebook, Lenovo and private equity firms such as Cerberus, BlackBerry said it will abandon a sale. Instead, it will raise $1 billion by issuing convertible notes to a group of long-term investors including its largest shareholder, Fairfax Financial Holdings.

The only formal offer to buy BlackBerry - a tentative one - had come from Fairfax, which wanted to take the company private for $4.7 billion. But sources said Fairfax boss Prem Watsa had trouble financing the deal. Fairfax will now end up with $250 million of the debt offering.

BlackBerry shares closed 16 percent lower at $6.50, giving the company a market value of about $3.38 billion, down from its boom-time peak of $80 billion.

"Now we're back to the downward spiral," said BGC Partners analyst Colin Gillis. "They've got $1 billion more cash that buys them time. The drumbeat of negativity is likely to continue."

BlackBerry named John Chen, credited with turning around Sybase Inc in the late 1990s, as its interim CEO and executive chairman. Sybase, an enterprise software company, was eventually acquired by SAP AG in 2010.

Chen's appointment was a surprise to investors as was the departure of current CEO Thorsten Heins, who will leave in about two weeks after the debt offering is completed. The company gave no reasons for the change.   Continued...