[OMGitworks]

A loan and a PP are two very different things.

I honestly don't think so. It's money owed, on the balance sheet, the only difference is the bonds probably won't be traded on the market. PP changes how the debt was obtained but I don't think it changes anything else or makes it not a debt. It was probably a PP so they would not have to reveal the scary state of BBRY finances to the public and because it would have taken too long. Paying 6% tells me the balance sheet and cash burn and other metrics are it the tanks. I don't think BBRY can't magically claim they are a debt free company because it is a PP vs bonds sold on the open market. Hope you know I am not trying to be a di##head.

[OMGitworks]

I wonder why they need that 1 B? I would have thought last ER's write down would have sufficed. Or, perhaps that is just a way for PW to extract more return for his continued support?

Posted via CB10

Cash burn I bet, 2 quarters maybe left, they needed to have at least a 1 year horizon for survival. Watch Wall Street kill BBRY and focus on cash burn over the next 2 ER's if I am correct.

[Superfly_FR]

Cash burn I bet, 2 quarters maybe left, they needed to have at least a 1 year horizon for survival.

More likely the last part of your answer. Liked though because they currently burn cash faster than they should.

[peter9477]

I wonder why they need that 1 B? I would have thought last ER's write down would have sufficed.

If nothing else, it gives them a longer runway (apparently much needed, to get this heavy beast off the ground).

That has to count in terms of customer perception. Think of it as buying the confidence of corporate clients that there are people willing to shore up the company for the long term, so they (the customers) can safely invest in moving up to BES10 and BB10. This is still consistent with Prem's long-term horizon on all this... he's putting (more) money where his mouth is.

[JasW]

This is GREAT news IMO!

Really? I would guess that the stock price will take a dive now, so I can't imagine how this is good news for shareholders.

[Bilaal]

I think this is great news? Anyone else agree? Can anyone break down what this particular bit in the press release means?

Under the terms of the transaction, the Purchasers will subscribe for U.S. $1 billion aggregate principal amount of 6% unsecured subordinated convertible debentures (the "Debentures") convertible into common shares of BlackBerry at a price of U.S. $10.00 per common share (the "Transaction"), a 28.7% premium to the closing price of BlackBerry common shares on November 1, 2013. The Debentures have a term of seven years. Based on the number of common shares currently outstanding, if all of the U.S. $1 billion of Debentures were converted, the common shares issued upon conversion would represent approximately 16% of the common shares outstanding after giving effect to the conversion.

[morlock_man]

Really? I would guess that the stock price will take a dive now, so I can't imagine how this is good news for shareholders.

Because longterm investors this that BBRY is worth more than $9!

[peter9477]

I think this is great news? Anyone else agree? Can anyone break down what this particular bit in the press release means?

I tried taking a stab at this already in this post.

[OzarkaTexile]

FF is putting another $250 mln at work, when he said he would not buy more shares. That has to be a positive.

So FF couldn't get funding for $9 a share, tries to shore up their failing position with a $250 million investment, and that has to be a positive?

I would hate to see what happens to BBRY if there were negative news.

[cjcampbell]

I honestly don't think so. It's money owed, on the balance sheet, the only difference is the bonds probably won't be traded on the market. PP changes how the debt was obtained but I don't think it changes anything else or makes it not a debt. It was probably a PP so they would not have to reveal the scary state of BBRY finances to the public and because it would have taken too long. Paying 6% tells me the balance sheet and cash burn and other metrics are it the tanks. I don't think BBRY can't magically claim they are a debt free company because it is a PP vs bonds sold on the open market. Hope you know I am not trying to be a di##head.

I know you're not man.

[peter9477]

What's the significance of the title "Lead Director"? I've never heard that one before.

[silversun10]

I think this is great news? Anyone else agree? Can anyone break down what this particular bit in the press release means?

it is a loan to BB that later can get converted into BB shares at $10. so, if BB thrives and rallies over $10 the lenders stand to gain...

[peter9477]

So FF couldn't get funding for $9 a share, tries to shore up their failing position with a $250 million investment, and that has to be a positive?

Headline: "Someone invests another $250M in BlackBerry."

Your response: "Oh no! That's terrible news!"

See anything wrong with that scenario?

[OMGitworks]

I think this is great news? Anyone else agree? Can anyone break down what this particular bit in the press release means?

They lend BBRY 1B at 6.0 %, a very high rate. If the stock price gets above 10, they have the right to convert their bonds into shares paying only 10 per and keeping the profit and diluting the current shareholders. Basically they get a very nice return (unsecured though) with a potential upside if the shares get above $10. This is a classic Warren Buffet deal structure but he bet on GS and other more stable companies when he did it.

[spiller]

I sure hope they are drawing up a partnership with Lenovo for the hardware side right now.... I see this as incompetence by the BOD.

Why would they not let the buying process play out? Why not let Prem fail and die on his word? That could have started the bidding. The shareholders would still have a chance to say no to $9. Everyone knew the stock would tank if the Prem bid didn't go through. What a disaster. Those board directors have pummelled the company.

[Bilaal]

I tried taking a stab at this already in this post.

Thanks for that Peter! Yeah, panic sell much. Like I said on my blog post, let the news sink, let BlackBerry get back to work and the stock price will take care of itself. BlackBerry HAS TO work and work hard though.

[OzarkaTexile]

Because longterm investors this that BBRY is worth more than $9!

Investors who are long BBRY must love this news. It's a great chance to buy stock in this fantastic company at a huge discount. Just like when the Playbook was discounted. Not a rejection by the market, just an opportunity to buy an extra device for the family.

[leafs123]

I'm a bit confused. Did they say they are ending all strategic alternatives or just the sale of the company?

I say this will John Chen as CEO and his connection to Silver Lake...

[OMGitworks]

What's the significance of the title "Lead Director"? I've never heard that one before.

It's my money and if you want it I need to be in charge and I want my guy (Chen) running the company. You would have thought the 6% return and conversion would have been enough, but its clear that PW trusts nobody at BBRY and the additional cost of his money was to be in compete control of the company. BBRY had no change but to roll over and accept it.

Going to get a cup a coffee I am sure I angering people with all of my posts. Giving myself a time out for some reflection and wound licking....

[Bilaal]

They lend BBRY 1B at 6.0 %, a very high rate. If the stock price gets above 10, they have the right to convert their bonds into shares paying only 10 per and keeping the profit and diluting the current shareholders. Basically they get a very nice return (unsecured though) with a potential upside if the shares get above $10. This is a classic Warren Buffet deal structure but he bet on GS and other more stable companies when he did it.

it is a loan to BB that later can get converted into BB shares at $10. so, if BB thrives and rallies over $10 the lenders stand to gain...

Very interesting. Thanks for the info, guys!

[OzarkaTexile]

Why would they not let the buying process play out? Why not let Prem fail and die on his word? That could have started the bidding. The shareholders would still have a chance to say no to $9.

There's no bidding. This company has been openly for sale for months and no one is interested. Shareholders can't say no to something that's never been offered.

[Bilaal]

Stock price seems ever so climbing back up. We are now at $6.71, down 13.16%

Better than the 20% and beyond earlier on, I must say.

[filmgirl]

it is a loan to BB that later can get converted into BB shares at $10. so, if BB thrives and rallies over $10 the lenders stand to gain...

Exactly. It's a long term hedge for FF (who clearly could not raise the funds to take it private), but it's debt and will have to be accounted for at some point.


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[silversun10]

I'm a bit confused. Did they say they are ending all strategic alternatives or just the sale of the company?

I say this will John Chen as CEO and his connection to Silver Lake...

the present board is toast now. so, wait for Chen to present his plan. all options will by then be back on the table.

[peter9477]

Another "what's the significance" question from me...

Ignoring all else that could change, if Fairfax ultimately converts its 25% of this extra 16% of the current float (i.e. its share of the $1B), then it would own about 12% of the company, i.e. over the 10% limit. I've never been entirely clear on what that 10% limit represents... but what would them owning 12% likely do in that situation?