Partners revealed in $1 billion BlackBerry investment

By Adam Zeis on 7 Nov 2013 04:28 pm
6
loading...
73
loading...
50
loading...

Earlier this week BlackBerry announced that they were calling an end to their pursuit for a buyer. They did however receive a $1 billion investment from Fairfax Financial and unnamed institutional investors, who were finally revealed today in an SEC filing

According to the filing, Fairfax has contributed $250 million to the deal as the other partners of Mackenzie Financial Corp., Brookfield Asset Management Inc., Markel Financial, Canso Investment Counsel Ltd. and Qatar Holding LLC fill in the remaining $750 million. 

Fairfax Financial had originally planned a deal to buy BlackBerry that was worth $4.7 billion, and while BlackBerry was rumored to have other offers on the table, they ended their strategic review period and are no longer actively seeking a buyer.

 

91 comments

TrailOfThought

Price won't rise until the shareholder is respected with a cash dividend.

Dave79

The dividend is the last of their problems. Firstly they need products (and services) that actually sell for profit not sitting in their inventory.

Puz_zled

R U corporate finance challenged? The LAST thing BlackBerry needs to do now is provide a dividend. Once they have stabilized their businesses and have exhibited steady sustained growth in profits and free cash flow for 3-4 -5years, then, maybe.....otherwise lay off everybody, shut the doors, sell the real estate and write one big dividend to wind things up.

Swiped with one thumb from the virtual keyboard of my awesome Z10!

q649

Lol, I hope you're not investing in the stock market.

bennyph

There are plenty stocks paying dividend out there. Buy those if you're hunger for dividends!

Posted via CB10

masque2

You know that stocks fall after a dividend payout, right?

Hassan00

Take care on this money and don't waste it on writing down another epic fail handset, just during a single quarter.

nt300

There's a reason why they written down so much in the Quarter. Next Q should look much better. And once again, the reason for the BB10 sales slump is due to this "Strategic Review", which confused people quite a bit and prevented most from buying BB10. They were afraid the company would go belly up, despite the FACT BBRY stated clearly they intend to 1000000% push forward BB10 and beyond.

Laalalaalalaa you get the drama. GO BBRY GO.

br14

" the reason for the BB10 sales slump is due to this "Strategic Review"

I think it had rather more to do with the fact US and other carriers simply refused to sell their phones.

Not that the strategic review didn't help. But most people on the street wouldn't know a "strategic review" if it slapped them in the face.

When your local carrier sales associate is told to push iPhone rather than anything else it's tough to sell BlackBerrys. It's that simple. Without carrier support BlackBerry can do very little about sales.

jsocan

At this stage, BlackBerry should just bypass the US carriers and sell direct to the customers via online and a few BlackBerry stores at key urban centres. Instead of giving incentive money to the carrier sales, give that to the customers in the form of discount off the unlocked phone price. Provide financing (don't they already do this in Indonesia?) so customers can pay off the phone over one to two years with monthly payments just like they would have gotten from the carriers on contract. Once enough of the amazing BB10 phones reach customers' hands, word of mouth plus some real marketing push will hopefully generate sustainable customer demand. Only then can BlackBerry get some respect from these US carriers.

Playbook007

Been saying this all along. The carriers are controlled by Apple and Android. It's big business. If Apple bought BlackBerry and left it as a separate entity, BB10 would have flown odd the shelves, Apple would continue its own successful path and Android would have taken a huge hit. BlackBerry would have been given life through the carriers and the confidence of an Apple owner.

Trolls should be forced to use BB10!

DPittsy

Wow. For a minute there I thought I might not know these partners!

Posted via BB10

ikalinin

i still don't know why the stock is trading at $6.51 !!?!??

mscloutier

Definitely the best response I've seen in awhile, I laughed so hard my face still hurts!

Via my PlayBook 10

BBThemes

Because apart from a failed takeover, they now have a bit more money, but still no effective visible plan for the future.

They had over 3bn this time last year.

Posted via CB10

sk8er_tor

Still, the valuation is very low.
Twitter, which has now been around for quite some time and has had a lot of time to catch on has yet to turn a profit and is valued at $30 billion. Meanwhile, BlackBerry, which has cash, patents, BBM/BES and other services, QNX, etc. is worth 1/10th. Yes, they had a big loss last quarter but that was mostly due to write-off of unsold product. BlackBerry's patents alone should be worth at least $3-$5 billion. Heck, Google thought Motorola's patents were worth approx. $10 billion when they bought them; surely BB is worth more than MOTO. Doesn't make sense to me. Another thing that doesn't make sense to me is why Frank Boulben hasn't yet been fired.

melb_me

Dude, It's called the corrupt Wall Street Casino. Nothing is as it appears........as your money disappears.

bobshine

Valuation is based on the prospects for the business. Twitter had been growing exponentially, and BlackBerry unfortunately hasn't been growing.

Investors are buying future earnings.

Posted via CB10

BBThemes

exactly. share price is based on perception of profitability (long and short term). if your companys reputation is poor and theres no sign you know how to fix that then going forward its not a good sign.

sk8er_tor

Twitter has not been growing exponentially!

birdman_38

Its revenue potential has.

SEAWARRIOR

"they had a big loss last quarter"

& also a couple quarters consecutively before that,,, & a few more to come if they actually are trying to turn bb around,,, less if they're out for the quick cash...

Spades1234

Their sales are still slowing is why. If they can't get the trend line in the other direction, that stock will go no where.

And yes, I'm a shareholder, and would like to gamble on a few more shares.

10

Playbook007

It will go up in time. Once q3 comes in, it will be time to buy

Trolls should be forced to use BB10!

Hassan00

Yes.
After announcing the Q3 financial earning the share will almost reach to $3

Undbiter65

Lol

"If you can't soar with the eagles then don't fly with the flock!" (BBM#18)

TrailOfThought

Best thing they can do is to pay the shareholders who have stayed with them for the last ten years a $7 divi ASAP. Then and ONLY then will the price go up.

LP_Rigg

LO SMH

Posted via CB10

juliezee

Alright I thought you had something wrong with you the first time you wrote this nonsense but now I realize you don't know what a dividend is.

Posted via CB10

canuckbear

Wall street is waiting for the small investors to leave. Then it will rocket up. Twitter has a capitalization of 40+billion and blackberry less tha 4. Its because only banks have their money parked in twitter. As soon as short selling is allowed it will crash.

Posted via CB10

mrlahjr

And BlackBerry should have been trading on the Frankfurt instead of Wallstreet where the crooks will lie, cheat and steal to keep it down.

Sent from my Awesome Z10!

Berryesque

Much love for BlackBerry from Qatar to all ya'all.

ya3goub

happy about the $750 million investment aren't we ;)

Posted via ZCB10

Berryesque

Hear, hear. I for one could not bear not using BlackBerry.

nalin909

Nice :)

Posted via CB 10 on my BlackBerry Z10

SK122387

Thanks for the money, everyone!

AYC2112

That's encouraging. Real investors. Awesome.

Posted via CB10

Gonzalez33

I wonder why no sheik from the United Arab Emirates bought BB. They all love their BlackBerries and $5bn is just pocket money for them. ;-)

The_Adventist

Harper and his cronies wouldn't allow it anyway.

Sent from my newly made awesome White Z10

jic999

Forget that, let them start buying BlackBerry phones, I guess now they are part of the convert sales in middle east will pick up.
Mackenzie fund managers will be equipped with BlackBerry

Posted via CB10

buccaneer54

You didn't notice Qatar investments.

Posted via CB10

Rickster1

Glad to see the Canadian presence. Hope the big pension funds that thumbed their noses at helping have to choke on a much higher stock price. Still nothing for sure for BlackBerry ahead but nice to see the homegrown support, mostly. Will be interesting to see how the downsizing is proceeding. Sales will no doubt be dismal bit hopefully enterprise is being cajoled off the sidelines with some cheap Z10 units. The reoccurring service revenue will ultimately be more important than sales revenue as seem from declining sales by Apple as an example.

Posted via CB10

jojo beaconsfield

I wish Mr.Chen was on that list.

FryBerry

I'm pissed!!! They didn't mention my name.

GUINDON

You said you weren't after notoriety and fame.

Posted via CB10

rlgwood

BlackBerry’s Best Hope Is Without BlackBerrys" - http://bloom.bg/1cG4HrX

Posted via CB10

br14

That article was garbage. BlackBerry will probably always need to produce some level of phones - even if lower volume premium phones. If only to supply world leaders who need to avoid NSA snooping.

Trish Reid

Good news that some heavy hitters have faith in this company1

bfunkera

It would still be nice if we could get a strategic partner in there too, like a Leveno or Cisco (I know Leveno was blocked by the government but a strategic partnership would be a different ball game). This would not only bring in more resources, money, clients/customers, etc. but would also show great faith in the future of the company. Maybe once they put some strategery in place we'll see something like that happen. Or maybe BB will just kill it by themselves. Either way, BlackBerry is back baby.

#TeamBlackberry #IChooseBlackBerry10 #SellLikeHell #OtherRelevantHashTag

Single-finger flickin' so good it make you wanna slap you mamma. Zed you very much!

br14

Lenovo could always produce phones branded BlackBerry and license BB10 software for their own phones in return.

They could split markets between them, or even simply address different market niches.

MyLightShines

Nice to see some support building for BlackBerry. Interesting note also is BlackBerry isn't caring much debt. Still have allot of work to do, going to take some time. BlackBerry 4 Life!!!

Posted via CB10

br14

"BlackBerry isn't carrying much debt"

Apart from the $1 billion in convertible debentures at 6% you mean.

ranzabar

Let's hope for the best

Posted via my BlackBerry Z10

RJ_Motivation

They forgot to mention Crackberry and Kevin.

Posted via Z10

falsetruth

Go Qatar go. Proud

Posted via CB10

vgorous

Wow Brookfield just loves spending money. They just bought Enwave last year.

From zedten

Otech#CB

So interesting. I'm glad they made it this far. Now back to the drawing board for future plans!

Posted via CB10

Chicago777Guy

BSM and Bruce Flatts are great investors.

Posted via CB10

axllebeer

The truth comes out lol

pbfan

It is mysterious why they need the bond. Don't they have 2.3B cash? I hope they will not write off another 1B next Q.

br14

The bond is to provide operating capital over the next two years.

They need to ensure enterprise customers that they're going to be around for the long haul. The more cash they have the better it looks. No business can survive with cash. Even if they're making a loss they need to be generating cash.

SoxFan

This means that at least $750 million of arms length investors with no other interest in the company (i.e., not Fairfax) belives in a worsat case scenario that the liquidation value BBRY exceeds $1B (since this is their only debt), or more practically, that it will be bought out or taken over for more than $1B.

That's about it's equity value right now.

The sotck/equity value is so low because it's hemoraging cash. Even with this investment I believe I heard the company has only enough cash to last thru 2014 at current burn rates.

If the company succeeds, this will be like issuing $1B in stock to new investors at $10/share.

If not, this is cheap debt at a very attractive 6% interest rate.

Overall, I don't see this as a big deal relative to their sale/takeover prospects.

Posted via CB10

br14

Burn rate maybe high, but is coming down as the restructuring changes take effect. They should be complete by early 2014. Which means losses for the next couple of quarters at least.

The bad news for investors is that if the company starts doing well Watsa will convert the debt to shares (which is great for BlackBerry the company of course) and dilute existing shareholder value by 20% or so.

Brian Persaud

Is now a good time to buy stock?

Posted via CB10

mikesz10

Stability of a company is number one priority!!! Which then will equal profit.

Posted via CB10

YTDW2000

A decent consortium showing a lot of confidence in a company on the move. Congratulations BlackBerry, well done.

Sent from my BlackBerry Z30

SoxFan

Hello. This show no confidence in BBRY, unless u think it's value will fall below $1B. These guys now have liquidation priority over other investors. They basically believe the company is likely to fetch at least $1B in a disaster sale, if only for its name and patents. Otherwise, they stand to gain of BBRY miraculously pulls a a rabbit out of the hat.

Not much of a show of confidence. Pretty much the opposite: no one could raise money to do a deal, no strategic buyers had any interest, and all they could raise was a billion dollars in debt.

Posted via CB10

br14

"They basically believe the company is likely to fetch at least $1B in a disaster sale"

No they don't. Watsa is already into the company for $750 million in shares on top of the additional $1 billion bond.

His credibility will be demolished if the transaction fails. He clearly believes there is significant value in the company that can be rescued with the right management.

And in fact the transaction means the company remains public shows a great deal of confidence.

If he'd been worried about the corporation he'd have taken them private so he could restructure quietly without market noise. Perhaps carving it up and selling off to the highest bidder.

The fact he's kept it public suggests he believes they can turn around the company **despite** the market noise. Which may suggest he's actually over confident.

And by the way, he's on record as stating he'd already raised the leverage needed. What he couldn't raise was investment (or perhaps he didn't want to lose control). Too much leverage would have left BlackBerry with significant debt to repay and reduced the amount of cash available for operations and R&D.

len5

I don't understand why anyone would invest this kind of money in BB. The only thing I can think of is they want BB's patent catalog.

br14

Watsa wants the gold seam.

If he can turn BlackBerry around he could see share prices rocket to $40 - $50. It really wouldn't take that much.

And then he could sell his stake for an enormous profit. As he often has before.

The patent catalog wouldn't even cover his investment by the time it was split with other creditors.

deltact

I hope Chris Umiastowski writes an analysis on this.

Posted via Z10 on the best touchscreen keyboard.

pbfan

This does not seem to be good for shareholders:

"Fairfax Financial's Debt Investment In BlackBerry Could Wipe Out Shareholders"

http://seekingalpha.com/article/1815492-fairfax-financials-debt-investme...

br14

Purchase orders can always be cancelled if it seems likely sales will not consume the inventory produced.

I wouldn't put too much stock in what is written in SeekingAlpha. Especially from someone shorting the stock.

Shorters must be panicking that John Chen turns BlackBerry around as he has done with companies twice before.

pbfan

Nothing to cheer. The interest rate (6%) is much higher than rates for A rating corp bonds.

Papadesaoud

Wow I couldn't believe my eyes Qatar Holding invested in Blackberry!

Posted via CB10

DaSchwantz

Folks, a couple of points.

Debt holders always take priority over shareholders. Nothing new here.

The 6% rate is reasonable, given the circumstances.

Bruce Flatt is a very powerful person to have on your side. The Wall Street thugs that are trying to take down BlackBerry and Watsa will quietly start to back away.

BlackBerry has 2.3b + 1-1.25b +. 5-1b in cash (if you include the deal and the tax refund). The debt from the convertible disappears if the company turns around successfully (assuming the share price > 10).

The next quarter may include further losses, but some of the figures will look better than last quarter. Losses are different than cash burn, so watch you should watch for is whether the cash burn is being brought under control.

Posted via CB10

Qurve

Love contrarian investing!!!

Q1o

Theo Groenevelt

Im sitting here on Fri Early AM and going through my weekly 10lbs of advert flyers. Always check out the usual, Visions, FutureShop, Best buy et all...nary anything advertised by BBry except for this:

Future Shop - nadda
Best Buy - Curve 9320 (wtf?)
Visions - Q5 on back page up against 3 other touchscreens
London Drugs - 9320

Mr Chen, we have a lot of work to do to get back at least to the point of being considered profitable and as a viable option to the competition. As a longtime BBry user, I and the rest of the legion will do our part to get the Company moving in the right direction - we trust you will do the same.

Lets show the world, that theses BB10 devices are the most capable, secure devices on the planet running a software platform 2nd to none.

Written with the superlative Q10..Z30 a coming!

KangarooDons

Qatar Holding?? Soo much for not going foreign

3 BBs in 3 years. 9000 > 9900 > Q10. send from Q10

Caymancroc

Nice. Interesting to see all the companies willing to lose money.