Manulife Financial Corp.’s asset management arm is the latest Canadian investor buying into BlackBerry Ltd.’s $1-billion (U.S.) bond deal, joining Fairfax Financial Holdings Ltd. as other investment firms trim back their portion of the troubled smartphone maker’s new debt issue.
On Monday, Fairfax announced it would raise $1-billion for BlackBerry with convertible debentures. Previously, Fairfax had said in a provisional bid that it planned to take BlackBerry private in a leveraged buyout that valued the Waterloo, Ont.-based tech company at $4.7-billion.
But the firm later decided that BlackBerry wasn’t suited to a high-debt situation, and instead announced the new financing and a management shakeup in which BlackBerry CEO Thorsten Heins would be replaced by former Sybase Inc. CEO John Chen, who would join as both executive chairman and interim CEO.
Manulife Asset Management Ltd., which revealed its investment in a document filed with the U.S. Securities and Exchange Commission, is purchasing $70-million of BlackBerry’s debt. Because the full $1-billion had already been bought up by other firms, Manulife’s purchase was enabled by Brookfield Asset Management Inc. and Markel Corp. trimming back their previously revealed positions.
Brookfield, which said it bought in on behalf of clients, reduced its $50-million stake to $10-million, while Markel pared back a $100-million investment to $70-million. The firms with the largest stake in BlackBerry’s debt are Fairfax, with $250-million; Mackenzie Financial Corp, with $200-million; and Canso Investment Counsel Ltd., which purchased $300-million, the largest stake.
BlackBerry, which dominated the smartphone industry for years, has suffered through declining sales, a worsening financial situation and thousands of layoffs – including a recent and ongoing cut of roughly 40 per cent of its staff – as smartphone rivals Apple Inc. and Samsung Electronics Co. Ltd. stole market share.
The firm’s new BlackBerry 10 phones, launched earlier this year, were supposed to help the company catch up with rivals’ more popular devices, but the new BlackBerrys have not ushered in the comeback that Mr. Heins and many investors hoped for – leading to a strategic review in which top management and a special committee shopped around for a buyer. That process came to an end on Monday, with Fairfax chief Prem Watsa rejoining the board as lead director and the addition of Mr. Chen – a turnaround veteran who revived Sybase and sold it to SAP AG.