BlackBerry’s plan to sell itself to its largest shareholder, Fairfax Financial Holdings, has fallen through, resulting in a 16% fall in shares.
The company has announced that it now intends to raise £627million ($1billion) worth of new financing. This follows BlackBerry reporting a net loss of £601million ($965million) in the second-quarter, claimed to be a result of poor sales of the new Z10 smartphone.
In an attempt to resurrect the losses John Chen will provisionally succeed Chief Executive Thorsten Heins, who will be stepping down. The company has also previously announced that they will be cutting 4,500 jobs, a staggering 40% of its workforce.
The plan to sell to a syndicate, lead by Fairfax, was going to be worth £2.93billion ($4.7billion). However, the struggle to raise the required finance meant that the deal fell through.
Fairfax, currently owning a 10% stake in BlackBerry, will instead contribute £156million ($250million) towards the company’s £601million goal of new finance.
Barbara Stymiest, Chair of BlackBerry’s Board of Directors, commented, ‘this financing provides an immediate cash injection on terms favourable to BlackBerry, enhancing our substantial cash position’.
John Chen, Interim Chief Executive, said that, ‘BlackBerry is an iconic brand with enormous potential, but it’s going to take time, discipline and tough decisions to reclaim our success’.
Although analysts are not so optimistic for the future of the company, Colin Gillis, BGC Partners Analyst said ‘now we’re back to the downward spiral […] They’ve got $1bn more cash that buys them time. The drumbeat of negativity is likely to continue’.
Source: BBC News