BlackBerry to raise $605 million from shareholder Fairfax, others

Once a dominant force in smartphones, the Canadian firm now holds just a sliver of the global market

Troubled smartphone maker BlackBerry Ltd said it would raise about $605 million by selling convertible debentures to shareholder Fairfax Financial Holdings Ltd and other investors.

The Canadian company will also redeem on September 2 roughly $1.25 billion worth of outstanding debentures carrying a coupon of 6%, it said on Friday.

The new debt that BlackBerry plans to issue will have a coupon of 3.75% and will be due in November 2020.

If all of the new debt is converted into stock, it will represent about 11.57% of BlackBerry's outstanding shares, the company said.

FairFax, led by well-known contrarian investor Prem Watsa, is BlackBerry's second largest shareholder with a stake of about 8.9%, according to Reuters data.

Once a dominant force in smartphones, BlackBerry now holds just a sliver of the global market.

BlackBerry said last month it would stop making its Classic model, raising further doubts about the future of the company's money-losing handset business as it shifts focus to software.

In July, the company unveiled a second Android-based handset, which combines Alphabet Inc's popular software and broad app catalog with its security and productivity features at a lower price.

BlackBerry Chief Executive John Chen has expressed confidence that the company's trimmed-down handset business can meet its September target to turn profitable.

Analysts, however, have urged the company to sell or shut down the unit.

BlackBerry's US-listed shares were little changed at $7.96 in afternoon trading.