BlackBerry has revealed plans to raise approximately $605 million USD through the sale of convertible debenture to Fairfax Financial Holdings, as well as other investors.
The Canadian Waterloo-based manufacturer also has plans to redeem approximately $1.25 billion in outstanding debentures that carry a six percent coupon, on September 2nd, 2016.
Despite BlackBerry’s other interests, including its BES12 enterprise security software, performing admirably, the company continues to cling to its struggling handset business. John Chen, the company’s CEO, has repeatedly said that his company will exit the smartphone industry if it isn’t able to tun a profit in the space. Despite this statement, BlackBerry recently released its second Android smartphone, the DTEK50, and claims that it still plans to support its own operating system, BB10.
BlackBerry’s new debt has a 3.75 percent interest rate attached to it that is due in November 2020.
“The restructuring of our convertible debt will enable us to significantly reduce our interest expense and potential future dilution for our shareholders,” said Blackberry CEO John Chen said in a media release sent to MobileSyrup. “I am pleased that Fairfax will continue as BlackBerry’s leading lender, reinforcing its ongoing commitment to the company as we continue to execute on our strategy of pursuing growth and sustainable profitability.”
BlackBerry says that is the entirety of its $605 million of new debt is converted back into stock, it would represent 11.57 percent of its outstanding shares. Fairfax, helmed by Prem Watsa, is the second-largest shareholder in BlackBerry.
In its most recent earnings report BlackBerry posted a $690 million loss with the company’s smartphone market share shrinking to just one percent.