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- 08-26-16 05:58 PMLike 3
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My BlackBerry Passport is not the most secure phone nor is it productive when I use it and it's not the best OS out there, so why do I have one? Oh! I remember, selfies.CDM76 and OlympusMons like this.08-26-16 06:12 PMLike 2 - BlackBerry announces plan to raise US$605 million through debenture sale | Financial Post
BlackBerry Ltd. announced Friday plans to raise US$605 million through the sale of convertible debentures to Fairfax Financial Holdings Ltd. and a group of institutional investors.
The Waterloo-based smartphone manufacturer also said it will recoup about US$1.25 billion in outstanding 6 per cent debentures on Sept. 2.
The new debt BlackBerry intends to issue will have a 3.75 per cent interest rate and come due in November 2020. The company has entered into an agreement with Fairfax and a group of investors, which will subscribe to the new 3.75 per cent unsecured convertible debentures of the company on a private placement basis. FairFax is Blackberry�s second-largest shareholder, after Primecap Management, and has a stake of about 8.9 per cent.
According to BlackBerry, if the US$605 million of new debt were converted to stock it would represent about 11.57 percent of its outstanding shares.
�The restructuring of our convertible debt will enable us to significantly reduce our interest expense and potential future dilution for our shareholders,� Blackberry�s CEO John Chen said in a media release. �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.�
A spokesperson for Blackberry told the Financial Post that the company will not be making any further comment.
The trading of shares of the company were briefly halted Friday afternoon, in Toronto on the TSX and in New York on the Nasdaq, before it announced the convertible debenture redemption and the new issuance.
The Waterloo-based mobile phone and software company has struggled to stay afloat in the evolving smartphone market. It recently pivoted its business to emphasize software, and doubled its software revenue on a year-over-year in the first fiscal quarter.
BlackBerry posted a loss of US$690 million in its most recent quarterly financial reports. That it�s hemorrhaging money isn�t news either: the company lost US$238 million in the previous quarter and US$89 million in the quarter before that.
While the company has kept a rosy public face, its underlying financials haven�t given much cause for optimism.
In 2009, the company had 20 per cent of the smartphone market share, which has since fallen to 1 per cent. Its handset division sold 500,000 phones last quarter, or about 100,000 fewer than the quarter before. At its peak, Blackberry was selling millions of phones every quarter.
Since late July, BlackBerry shares have risen to their highest levels since spring, hovering around US$8 on the NASDAQ. The company was rated by Raymond James Financial as �outperform,� who boosted its price target to US$10.50 from US$8. With shares where they are, there could be nearly 30 per cent in upside if Raymond James� estimates bear out over time.
The company�s Nasdaq listed shares are down US$14.71 in 2016. Its stock was trading at $10.28 before shares were halted on the TSX.08-26-16 07:20 PMLike 3 - 'All sorts of doors' open as BlackBerry restructures debt: analyst | CTV Kitchener News
BlackBerry’s announcement that it will be restructuring its debt is “smart financial management,” one tech industry analyst says.
“It gives BlackBerry even more runway as it continues to manage its way through what’s become a very protracted transition period,” CTV technology analyst Carmi Levy said Friday.
BlackBerry announced Friday that it will be redeeming US$1.245 billion worth of unsecured convertible debentures, which can be converted into shares in the company at a price of US$10 per share.
Additionally, the Waterloo-based company said that it had signed a deal with its second-largest shareholder, Fairfax Financial Holdings, as well as other investors to raise US$605 million in new convertible debentures, which will come due in 2020.
If all of those debentures were converted into shares, they would represent about 11.57 per cent of the company’s total shares outstanding.
In a statement, BlackBerry CEO John Chen said the restructuring would let the company “significantly reduce our interest expense and potential future dilution for our shareholders.”
Levy praised Chen for keeping his eye on BlackBerry’s balance sheet during a time of “growing speculation” of a possible takeover attempt, despite denials by the company.
“The rosier outlook definitely opens up all sorts of doors that were once closed, and I’d expect today’s announcement to further spur this kind of talk,” he said.
Best known for its handset manufacturing business, BlackBerry has been trying to diversify its options in recent times.
Last month, it unveiled plans for the DTEK50 – which it said would be the most secure Android smartphone available – and followed that up by releasing some of its apps into the Google Play store.
The company has also made acquisitions with eyes on the Internet of Things field and cybersecurity consulting.08-26-16 07:22 PMLike 4 - I told you all there would be another issuance to keep Fairfax in the Captain's Chair. The interest rate is a lot better for BBRY this round, and it appears to be held even closer to the chest this time.
Posted via CB1008-26-16 08:33 PMLike 5 - How come when these debentures were announced, there was something like a 15-20% drop the day after if my mind recalls correctly, but now that half are retired, the rest renewed at better rates, there are crickets?
I never understood that drop, the net asset value of each share didn't change, but the market acted as if 25% more shares were written into existence, diluting their own.
It seems like in the end, the debt was really more of an insurance policy so if they did need the money, they will have enough. Remember, if a company doesn't have enough cash to pay all their short term debtors, they'd basically have to file for bankruptcy.
Posted via CB10alludba likes this.08-26-16 08:45 PMLike 1 - The 'we have over 2.5 billion in cash' statement to their clients was worth a lot more than the cost of it, 75 mio in interest payments. If the new debt comes with a conversion clause, than I think we all have to assume that these WILL get converted into shares eventually, diluting ours. Or that's what I 'hope', since I really don't want to stay below 10 USD until 2020!
Any thoughts from our guru, Morgan?!
Posted via CB1008-27-16 04:36 AMLike 5 - Just like it is for all of us, anytime you can pay down debt its a good thing. Here, they paid down debt and refinanced the rest at a much lower interest rate. Nothing bad here. The original 6% bonds gave BlackBerry extra cushion in case they needed it, and turns out they didn't (or at least I don't think they did). If it weren't for the patience the market gave John Chen, it could easily have gone the other way. The new debt appears to have the same conversion terms as the original debt, so I think it's meant to be neutral.
As getting debt without the conversion option, this article may help (or may not):
https://finance.yahoo.com/news/wonde...160000020.html
(7250 -> 8703e -> 9530 -> 9550 -> 9650 -> 9930 -> PlayBook -> Z10 -> Z30 -> Classic -> PRIV)08-27-16 07:16 AMLike 0 - The 'we have over 2.5 billion in cash' statement to their clients was worth a lot more than the cost of it, 75 mio in interest payments. If the new debt comes with a conversion clause, than I think we all have to assume that these WILL get converted into shares eventually, diluting ours. Or that's what I 'hope', since I really don't want to stay below 10 USD until 2020!
Any thoughts from our guru, Morgan?!
Posted via CB10
Please correct me if I'm wrong!
Ideally, BlackBerry will make $600million profit before then, and be able to buy them out.
Posted via the CrackBerry App for Android08-27-16 09:02 AMLike 0 - If I understand correctly, they cannot be converted until expiry, so BlackBerry has the option of buying them out before then if the share price goes over $10.
Please correct me if I'm wrong!
Ideally, BlackBerry will make $600million profit before then, and be able to buy them out.
Posted via the CrackBerry App for Android
This time they are not redeemable prior to maturity - so if the stock is above 10 USD on November 13, 2020 - it seems to me that they will definitely convert into common shares...?
Posted via CB1008-27-16 10:57 AMLike 4 -
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- [info]Don't forget to post content with your links gentlemen; there's been a few here and there of late![/info]08-27-16 09:05 PMLike 0
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The actual dilution on stock price if it happens will be ~10% of the difference between $10 and whatever the stock price is in 2020. It only happens if we're above $10, which sad to stay is still a decent step up from here.Bacon Munchers likes this.08-28-16 09:22 AMLike 1 - The 'we have over 2.5 billion in cash' statement to their clients was worth a lot more than the cost of it, 75 mio in interest payments. If the new debt comes with a conversion clause, than I think we all have to assume that these WILL get converted into shares eventually, diluting ours. Or that's what I 'hope', since I really don't want to stay below 10 USD until 2020!
Any thoughts from our guru, Morgan?!
Posted via CB10
Today, John Chen, has talked to all of the bond holders and they have agreed to exchange, retire and to receive the blended penalty payment ahead of the iron clad date of November 13, 2016. Half the debt will go away for a little over one year's worth of interest penalty and the other half continues on at a yield of not just 3.75% but 3.75% plus the up front penalty of $ 40.6 MM bucks. That is giving holders an effective yield much higher than the stated return. They did nothing to gain this slightly lower yield, the paper is the same, the due date for redemption is the same, the conversion is the same, they just get a slightly lower yield, say, 5% for being there.
John Chen retires debt well ahead of the due date, why would he care if it occurs on Sept. 2nd versus Nov. 13th? Why did he float $ 605 MM versus $ 600 MM? Funny things these decisions are, he wants it done in Q2 so he made sure that everyone who re-invests in the bonds get their allotment and potential share conversion down the road. If he does it once, he can do it again, that is, talk to the holders of bonds and redeem them early. He seems to be okay with a 60.5 MM share dilution which brings his float to well under 600 MM shares total with a share buy back still in place. The terms of both issues are the same, he clearly did this to reduce the potential dilution to the shareholders while feeling like he needed more money for acquisitions, I assume this of course. BB can operate on about $ 250 MM per year in cash, why would he need more than $ 1.3 B in cash let alone a bond offering and an additional $ 605 MM plus $ 500 MM in operating loans from the bank?
I'm okay with the deal, it is costly but we knew that would be the case. You have to wonder why he feels he needs so much cash though. I believe that certain players wanted to retain a good portion of their investment in order to generate yield while waiting for capital gains. I don't know if he had a choice in the matter as Prem needs to lower his average cost per share. Prem could have stepped into the open market and purchased those shares but he owes it to his investors to generate yield. The company as a whole is now much easier to acquire, that's good news as we want the stock price to go up soon to reduce this from actually happening. I see it as a positive over all and see the stock doing well. Needless to say, I have been waiting for months to see what would happen as Chen had indicated he wanted all of those bonds back ASAP. That's my take on all of this.08-28-16 09:31 AMLike 18 - A couple of points about the new convertible deal:
The old converts were trading above 106 before the new deal was announced, so it was going to cost some money to redeem them any way you slice it.
The costs will be included in one time costs but will reduce ongoing interest costs, which should be good for cash flows, earnings, and share price eventually.
Would like to know who is participating in the new converts...particularly any US firms...will see what I can find.
Interesting that it was structured to not be convertible till expiry this time.
Dilution via hedging (shorting) is cut in half, so hopefully this takes the edge off.
If you want to follow the latest price of the converts,you can find it here:
http://www.financialpost.com/markets...ebentures.html
Posted via CB1008-28-16 01:19 PMLike 10 - Quick thought here, BB has $ 605 MM they don't need and a healthy share buy-back program, it makes sense for them to step up now and retire as much stock as they can at these levels. Perhaps Chen has done the math on this one ................. aside from that, an acquisition would be in order.08-28-16 01:34 PMLike 10
- Quick thought here, BB has $ 605 MM they don't need and a healthy share buy-back program, it makes sense for them to step up now and retire as much stock as they can at these levels. Perhaps Chen has done the math on this one ................. aside from that, an acquisition would be in order.
Just curious, what gives the hint that an acquisition is a possibility? Because of the cleaning up of debt and removing some lenders?08-28-16 01:41 PMLike 0 -
“The restructuring of our convertible debt will enable us to significantly reduce our interest expense and potential future dilution for our shareholders,” Blackberry’s CEO John Chen said in a media release. “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.”
A spokesperson for Blackberry told the Financial Post that the company will not be making any further comment."
They could have wiped out much more dilution here so it appears that Prem wanted to hold conv. bonds in order for the deal as a whole to fly. Quite a job for BB to call all of the bonds in a couple of months ahead of their natural retirement date. Something must be up here.08-28-16 01:55 PMLike 11 -
This is a beautiful little company that managed to mitigate all of its risk by becoming a HW designer. There is no risk in this name any more hence the bond call. Now what on earth do they need with $ 605 MM unless prior bond holders demanded an off-setting position to control common stock. I wanted him to call it all in and not place another round of financing. If they can run on $ 250 MM and $ 500 MM in credit, why carry so much cash unless you want to purchase more tech or you want to buy back stock at $ .75 on the dollar. Today at $ 8.00, it makes perfect sense to buy the stock and finance it at 3.75 %. I wonder if Chen will discuss this in detail one day. In a perfect world, you would hope he could make far more money, or return, on the $ 1.8 Billion he is forced to invest. Buy the stock back up to $ 10.00/shr or buy another source of revenue.
�The restructuring of our convertible debt will enable us to significantly reduce our interest expense and potential future dilution for our shareholders,� Blackberry�s CEO John Chen said in a media release. �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.�
A spokesperson for Blackberry told the Financial Post that the company will not be making any further comment."
They could have wiped out much more dilution here so it appears that Prem wanted to hold conv. bonds in order for the deal as a whole to fly. Quite a job for BB to call all of the bonds in a couple of months ahead of their natural retirement date. Something must be up here.
If JC had waited until November, couldn't he have retired all those bonds, without having to negotiate another deal with prior bond holders? Of course it could be that all he wanted was a war chest, just in case of, but wouldn't he have had alternatives like the 500 million USD credit line or a bond offering without a conversion clause?
Anyway, I like your vision of a buyback but to me that doesn't sound like conservative Chen. I think their previous announcement has already ended - and it seems to me that they never did much with it except for countering dilution due to their employee benefit program.
http://press.blackberry.com/en/finan...e-program.html
Posted via CB1008-28-16 03:25 PMLike 5 - I'm just glad that he/they chose Sept 2nd this time around. That way they could announce this news BEFORE quarter end, unlike most quarters where they slip into the quiet period without saying anything, and then we get all worked up when we read rumors the week of the ER that the company wouldn't respond to because of the "quiet period."08-28-16 03:33 PMLike 5
- I don't think there is anything major going on...this approach gives Prem what he wants and also gives Chen more control over EPS growth. There will be more buybacks and likely more Rev growth via takeovers. The big long suck from continued SAF declines is only going to be a factor for 1-2 more quarters, so comparables will all start improving very shortly. They are setting this up for institutional holding again, and it won't take too much longer to get there. The big question mark still hovers over the hardware side, but the comparables can't get any worse, so that ends up being just another cylinder to fire on.
If any of the new convertible holders try to reestablish short positions, there may be a chance to buy more shares if price gets under pressure.....
Posted via CB1008-28-16 03:36 PMLike 3
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