Originally Posted by
EchoTango For those who are not financially savvy....
This is a private placement Convertible Bond (debt) termination and re-issue where Blackberry is redeeming the current Convertible Bonds at 6% and simultaneously issuing new Convertible Bonds at 3.75%, which Fairfax has already agreed to fully subscribe. The Convertible option means the bonds can be "converted" to common shares at $10 USD per share, which is currently underwater, but may be a significant should the stock move higher on better earnings. Clearly 6% return was pretty good when you consider the Bank Rate is currently at .5%.
This is marginally good news for Blackberry which will reduce it's interest payments by 2.25%, but I wonder what side deal Jon Chen had to agree to for Fairfax to let this happen. Remember, John is Fairfax's "creature" so I doubt John would do anything to disadvantage them. We won't know until either the company is sold or the stock gains become material and maybe we'll see a "surprise" dilution of the stock, for example.