Fairfax Financial is no longer offering to buy BlackBerry outright and BlackBerry chief executive Thorsten Heins is leaving the company.
Instead, Fairfax is leading a group that will lend US$1 billion to the smartphone company. Fairfax will provide about one-quarter of the cash infusion.
It’s a major change from its original proposal, six weeks ago, when Fairfax offered to lead a group to buy the Waterloo, Ont. based company outright at US$9 per share.
News of the announcement sent BlackBerry shares plunging 18% in premarket trade to US$7.77 before a trading halt was issued.
BlackBerry says Heins will be replaced on an interim basis by John Chen, who will also be the chairman of a revamped BlackBerry board.
Barbara Stymiest, who has chaired the BlackBerry board, says the revised offer from Fairfax — the company’s largest shareholder — is a vote of confidence.
“The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders,” Stymiest said in a statement.
“This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position.”