1. oilgeo10's Avatar
    Now we finally know why BlackBerry never got Instagram, Netflix, Skype, etc, as the BOD and BB management was busy developing this 'Built for BB10' shady business app called Grand Theft Watsa!

    Because that's what this plan is. Rather than costing 4.7B, Watsa only pays $1B and appoints himself to be the top director on the new board, responsible for everything of importance, even though he has already proven a poor performer as a past director during the lead up, launch, and ongoing delivery of the failed BB10 phones.

    The theft? That this deal is essentially a bond being issued by BB, the bondholders will be Fairfax and a number of others. Blackberry will have to put up hard assets as collateral. This means if BB goes south, which is still the bet, Watsa & bond holding friends will be first in the line of creditors and retail shareholders will be dead last when almost nothing is left.
    Now he probably wants to get control asap so he can reset some break fees (aka poison pill), to reduce any other takeover attempts. A grand theft indeed.

    Posted via CB10
    11-04-13 10:59 PM
  2. bibochas's Avatar
    You r right, unfortunately.
    I love BlackBerry but this guy is taking advantage in deed
    11-04-13 11:05 PM
  3. dalinxz's Avatar
    Especially when they don't need the money and if they did, credit is cheap right now. They could get a much better deal than 6% interest, which would further dilute the shareholders once the debenture is converted to shareholders equity.

    They're basically adding 1Bn to the cash and issuing debt to look pretty. Sad that he has any say and is even being allowed back on the board, let's hope Chen puts a stop to that immediately.

    Posted via CB10
    11-04-13 11:30 PM
  4. chtang's Avatar
    Blackberry will have to put up hard assets as collateral. This means if BB goes south, which is still the bet, Watsa & bond holding friends will be first in the line of creditors and retail shareholders will be dead last when almost nothing is left.
    The convertibles are unsecured, so Blackberry shouldn't have to put up any assets.

    As for shareholders being last in line, that's par for the course. Whenever a company fails with more debts than assets, the creditors get the whatever's left and shareholders lose their investment. It's just a part of the risk one takes when owning equities.
    11-04-13 11:52 PM
  5. krackerjack69's Avatar
    Prem is a shrewd investor he knows what he is doing and how to make money. Part of the deal was him taking the big shot chair as the lead and bringing in John Chen. There would be no John Chen without Prem. They will make a go to turn this company around if they see it failing they will quickly liquidate and make money from what they can. Regardless of the outcome Prem and Fairfax make money !
    11-05-13 12:01 AM
  6. zee3p0's Avatar
    Maybe. Fairfax is up to their face in this now. The billion dollars i thought maybe they didn't need at first, but the more i think about the more things are leading to BlackBerry sitting on 2.5 billion in inventory and a large write down and cash burn on the way. To say fairfax is going to walk out of it with cases of cash is a bold statement.

    Posted via CB10
    11-05-13 12:32 AM
  7. slickvguy's Avatar
    I don't usually respond to these posts, but in this case I will. You're wrong. Period.

    I'm not thrilled that the BOD entered into this agreement with FFH and the others for the $1 billion, but it is common when an attempt to sell winds up busting. Sad, but true. In part, it is to save face. Also, it is an attempt to instill confidence in customers that BBRY will be around for a long time. In that respect, it is not a bad move. The funny thing is that no matter what BBRY does it is looked at negatively, so instead of it being "Oh great! BBRY has DEEP pockets now" it becomes "Gee, they must be burning through cash faster than we thought".

    Please keep in mind that FFH is funding $250MM of the $1 billion, i.e. ONE QUARTER only. $750MM is coming from other sources. It's remarkable how many stories I've seen already acting as if this is a $1B FFH financing. It isn't. It is wrong to represent it as such. Who are the other partners? Probably the pension funds PW was courting. They are certainly more comfortable lending money with assets to back them versus risking money on a BBRY turnaround.

    Now, the reason you are wrong about it being "grand theft" is because the only way this impacts non-FFH common shareholders is if: a) BBRY burns through an EXTRA billion that they otherwise would not have. In that case, what difference does it make? If they burn through the "extra" billion, why shouldn't the lenders get their money back first? Of course they should! Makes no difference if it's FFH or Royal Bank or your grandma. Nobody would lend the money otherwise. BBRY isn't being forced to spend it! If BBRY does not burn through that cash, then FFH et al get their money back - no difference except for the interest payments. Thus, none of that makes a difference to common shareholders. b) the stock price goes above $10. In that case, we're looking at dilution. Not terrible - but not desirable either. THAT is the one thing I have a big beef with, but if BBRY does come back, it'll still be much better than if it was private! Follow? Because if it hits $10, common shareholders are obviously better of than had FFH privatized it at $9. Man, I sincerely hope that PW and his friends do get to convert those debs at $10!!! It would turn a loss into a profit for me and quite a few others. But I wouldn't bet on it. It could very well be that BBRY never sees $10 again. Ouch. Don't forget that if BBRY goes into liquidation, PW's common shares are in a no better position than yours or mine.

    PW wanted to make sure that a) he gets control, b)BBRY is well-funded, and c)they have a new CEO. This is either the beginning of a bonafide turnaround for BBRY *OR* it is the end. The extra $250MM means nothing to PW. He gets 6%/year ($15 million) which is peanuts compared to how much he has risked in BBRY. Time will tell. BTW, it would not surprise me if BBRY made an acquisition soon and that that is what the billion is for.

    The mistake the BOD made today was calling the new CEO "interim". Terrible! If you're looking to instill confidence and stabilize things, you don't use the word "interim". Who are they going to get that's better than Chen? Another TH? That was a really stupid move on their part. As usual.
    Last edited by slickvguy; 11-09-13 at 05:16 PM.
    11-05-13 12:35 AM
  8. oilgeo10's Avatar
    You have some good points. But it's the way in which the deal has been handled (some will say manipulated) by Watsa that will make many skeptical. He's made one of his worst investments with BB, and has been all about saving it at any cost.

    - He had to have known about the debt that they were willing to take on before the initial offer. What happened to his consortium?

    - as chairman of Fairfax, he had to have known about the upcoming loss that they released last week.
    - was it a lie when he said he has the financing to do the 4.7B deal?

    There's no way that BB would be using this money to make an acquisition! For sure BlackBerry has been spending more than revenue since the Q report at end of September.

    Everything written today about Chen suggests he is an interim chief. Apparently he won't even be moving to Waterloo; running the show from California. Nobody watching the shop, the few remaining employees will be on paid vacations while awaiting their pink slips.

    Posted via CB10
    Last edited by oilgeo10; 11-05-13 at 01:28 AM.
    dalinxz likes this.
    11-05-13 01:04 AM
  9. zee3p0's Avatar
    The cash is to kill the hardware business and write down inventory. 75 percent of revenue came from services last quarter, im seriously doubting that it is any better now. The services business is higher margin. If you shave the one billion in costs kill the hardware what you are left with is a niche focused security and software company with nice margins. Throw in a marketed bbm app and the money is there. License out or sell off any heardwear related patents. Man they aren't going head to head with Samsung heardwear is done. How many phones a quarter do they need to sell to even break even like 5 million?

    Posted via CB10
    11-05-13 01:36 AM
  10. the_sleuth's Avatar
    BlackBerry is getting a good rate at 6%. Convertible debenture is unsecured debt. Nevertheless, it is highly dilutive to existing shareholders to the tune of 16%. $1 Bil will extend the runway for a little longer but BlackBerry needs to sell products. Currently, BB10 hardware is not selling at the magnitude that will ensure its survival. Only gem here is BBM. BlackBerry needs a monetization strategy around BBM. BES10 and BB10 sales have not stabilized yet. I wish new CEO, J. Chen, good luck. He has a lot on his plate from the mess left by old BOD and Heins.
    11-05-13 10:31 PM
  11. Chicago777Guy's Avatar
    Now we finally know why BlackBerry never got Instagram, Netflix, Skype, etc, as the BOD and BB management was busy developing this 'Built for BB10' shady business app called Grand Theft Watsa!

    Because that's what this plan is. Rather than costing 4.7B, Watsa only pays $1B and appoints himself to be the top director on the new board, responsible for everything of importance, even though he has already proven a poor performer as a past director during the lead up, launch, and ongoing delivery of the failed BB10 phones.

    The theft? That this deal is essentially a bond being issued by BB, the bondholders will be Fairfax and a number of others. Blackberry will have to put up hard assets as collateral. This means if BB goes south, which is still the bet, Watsa & bond holding friends will be first in the line of creditors and retail shareholders will be dead last when almost nothing is left.
    Now he probably wants to get control asap so he can reset some break fees (aka poison pill), to reduce any other takeover attempts. A grand theft indeed.

    Posted via CB10
    What non sence...Prem also has common equity just like every other shareholder...Deal is great for everyone...would you give loan to BlackBerry at 6% unsecured or without any equity option?

    Posted via CB10
    11-05-13 11:58 PM
  12. sentimentGX4's Avatar
    Who are they going to get that's better than Chen? Another TH? That was a really stupid move on their part. As usual.
    Maybe Chen doesn't want the position permanently? He's just stepping up while BBRY searches for a new CEO and is not even moving out of California.
    11-06-13 12:15 AM
  13. danprown's Avatar
    true, but they have dangled 88 MIL in front of him if he a) finds himself as the best choice b) turns thing around.

    Maybe Chen doesn't want the position permanently? He's just stepping up while BBRY searches for a new CEO and is not even moving out of California.
    11-07-13 07:28 PM
  14. anon1727506's Avatar
    OP, you sound as if you speak as an owner of some BBRY shares.

    I hope that this has been a learning experience for you, and that you will use information it the future to make wiser "bets". BlackBerry has been nothing but a gamble for the last two years for retail investors. But too many assumed that they couldn't loose because BlackBerry had assets that were worth so much - even worse case they should be covered. In most cases the "value" of those assets never make it to the retail investor.

    The simple truth is while you might not like the current "plan", there isn't anyone else out there showing much interest in offering more. BlackBerry has been looking for well over a year now - ask most sellers what they normally do if a product doesn't sell after a year. This seems more like a last ditch effort than a purposeful attempt to steal BBRY. Yes PW is looking out of Fairfax and himself, but that is what he is suppose to do.
    kbz1960 likes this.
    11-08-13 11:38 AM
  15. slickvguy's Avatar
    Maybe Chen doesn't want the position permanently? He's just stepping up while BBRY searches for a new CEO and is not even moving out of California.
    Agreed. It's clear from his comments that Chen won't take the job unless he thinks he can turn things around. As for not being in Waterloo, I see that as a good thing! Better perspective. For far too long the management and BOD have been operating in a myopic vacuum.

    My perspective is most likely different from other shareholders because my ACB is relatively low (around $8).
    To be honest, I'm simply looking for anything that will get the SP up to my break-even point - and I'll be gone. I am not a long-term shareholder.

    The knee-jerk response to the media blaring Chen's compensation package - while totally misrepresenting it - is quite sad. I understand shareholders being angry - but they must be reasonable. To my mind, it is an excellent package! Exactly what you WANT to see as a shareholder. He makes a fortune if he is successful, but otherwise they are paying him very little. What is horrible is when a CEO like TH gets $22 million for simply leaving after having been a failure! You reward success - not failure!

    So now we have the following:

    1) An interim CEO who is heavily incentivized to make BBRY a success.
    2) A well-funded company that has the resources it needs to stage a turnaround.
    3) Convertibles with a conversion price of $10.

    This is all GOOD for shareholders, but more so for people with lower ACB. If your ACB is far higher, it'll be that much tougher, and the dilution will certainly hurt - but it is quite possible that the extra billion dollars gives them that chance of turning things around. Obviously the BOD thought they would need the money. What are the alternatives? Are there any? You need time, money, and good leadership to turn a business around. I believe they now have the necessary pieces in place to ATTEMPT to FINALLY turn this company around. BIG changes are needed. And if they do succeed - against the odds - the shareholders will do better than had they gone private and been paid $9. So many shareholders were griping about the privatization/$9. Well, now they got what they wanted. Me, I would have much preferred the $9 and been done with it.

    One of two things is going to happen. a) Blackberry is going to fade away, declare bankruptcy, and liquidate. In that case, common shareholders will see very little if anything. How can shareholders think having an extra billion dollars is worse? It can only help! The downside for shareholders was the same regardless (unless they liquidated TODAY, which they are not willing to do. see: recent reports that the BOD wouldn't consider offers to break up the company). b) Blackberry restructures, refocuses, and comes back from the brink.

    If you think Prem Watsa doesn't want to see BBRY come back, you aren't dealing with reality. An extra $250MM lent by and owed to FFH is peanuts compared to their losses on common shares. They very much want this company to turn around, get the SP back over $10, and convert those debentures. I sincerely hope they achieve this goal. From my perspective, the last few moves make it far more likely - not less. However, if my ACB was in the $20's, I could see where the dilution is a negative, but only if that extra billion wasn't necessary for the turnaround.
    11-09-13 05:07 PM
  16. slickvguy's Avatar
    You have some good points. But it's the way in which the deal has been handled (some will say manipulated) by Watsa that will make many skeptical. He's made one of his worst investments with BB, and has been all about saving it at any cost.
    Isn't that a good thing? Man, do I hope he saves his investment - because it'll also means he saves mine - and hopefully yours too. It is my sincerest hope that Chen makes two hundred million and FFH makes all their money back! lol.

    I can't understand people rooting against PW et al. I understand the perception that there have been underhanded or dirty dealings, but the bottom line is that at this point, what is good for them is also good for us (especially if your average cost is below $10).

    There's no way that BB would be using this money to make an acquisition!
    Never say never, my friend. If you're trying to stage a restructure and turnaround, sometimes making an acquisition is a terrific, bold move. It takes money to make money.

    Sure, the money will likely be used for shuttering/restructuring. Laying off 4,500 employees is going to cost a lot of money up front. They owe a lot to manufacturers too on buy commitments (though that information has not been fully disclosed. They will settle for a much smaller amount than has been reported by the media). So I agree that an acquisition isn't likely, but I just wanted to throw out that possibility because I have seen companies in this situation do exactly that.
    11-09-13 05:21 PM

Similar Threads

  1. John Chen - Prem Watsa - BlackBerry 10
    By Mic_JP in forum General BlackBerry Discussion
    Replies: 2
    Last Post: 11-04-13, 06:46 PM
  2. Fairfax /Prem Watsa failed to secure funding?
    By Stephen Cooper in forum General BlackBerry Discussion
    Replies: 14
    Last Post: 11-03-13, 10:04 PM
  3. Blackberry Sand Grand Prix
    By dtango in forum News & Rumors
    Replies: 3
    Last Post: 11-03-13, 08:21 PM
  4. And the winner will be Prem Watsa!!!
    By wincyUt in forum BBRY
    Replies: 6
    Last Post: 10-28-13, 02:59 PM
LINK TO POST COPIED TO CLIPBOARD