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This file photo taken on October 12, 2011, shows Blackberry mobile phones in Rennes, France.DAMIEN MEYER/AFP/Getty Images

Ottawa will review the US$600-million sale of BlackBerry Ltd.’s legacy smartphone patents to a U.S. firm that plans to license them, dragging out the Canadian company’s exit from the handset market it pioneered before recasting itself as a cybersecurity business with an interest in connected cars.

Industry Minister François-Philippe Champagne said Monday that the federal government will scrutinize the deal through the Investment Canada Act, which it routinely does with such acquisitions “to ensure they are likely to have a net benefit to the Canadian economy, and do not pose a risk to our national security.” Last March, his department updated the act to include reviews on transactions that might involve “potentially sensitive technologies.”

The sale, which has been in the works since 2020, was also announced Monday. Buyer Catapult IP Innovations Inc., which was formed specifically to buy the assets, was created last June. It is led by the Baltimore, Md., inventor and entrepreneur York Eggleston, who has been amassing patent portfolios in recent years to tap into their licensing potential, according to Arif Bhalwani of Third Eye Capital, which led the deal’s financing. Catapult did not return a request for comment.

The Baltimore company, which is registered in Delaware, is paying for the deal with a US$450-million senior secured loan and a promissory note for the balance, which is secured by a second lien on the patents payable in five instalments starting three years after the closing date.

Catapult has secured US$400-million of conditional commitments from a syndicate led by Toronto-based Third Eye that includes an unnamed Canadian pension fund, BlackBerry said in a regulatory filing with the U.S. Securities and Exchange Commission. The filing added that Catapult will also need to complete a US$90-million equity financing in order to access the loan and complete the transaction.

Third Eye’s chief executive officer Mr. Bhalwani said BlackBerry wanted to ensure there was Canadian involvement in the deal – and that because the transaction was a hybrid of equity and debt, Third Eye would have a stake in Catapult’s continuing business if it achieves certain milestones. Some BlackBerry staff will move over to Catapult as part of the deal, he added.

Third Eye is an alternative investment firm that has been exploring ways to monetize increasingly valuable intellectual property. The BlackBerry trove has about 38,000 patents, he said.

“What inspired us to back it is that it’s going to help a lot of emerging, growing companies access technology,” Mr. Bhalwani continued. “The BlackBerry portfolio is now able to be unlocked and hopefully will spur some innovation and growth a lot more broadly.”

BlackBerry did not make any of its executives available for comment Monday.

The company once known as Research in Motion Ltd. has spent the past decade, much of it under the guidance of CEO John Chen, building on the strength of the secure messaging its BlackBerry handsets were once known for. Securing data transmission, particularly for enterprise customers, is now one of the company’s core business lines – as is connected-car technology, which itself requires increasing data security with each passing year as automakers continue to refine technology for self-driving cars.

The company said the transaction would not affect its customers’ use of any of the company’s current products or services in areas such as technology to power connected cars or cybersecurity, and that it had obtained a licence to the patents being sold. The transaction is expected to take up to seven months to complete.

BlackBerry earlier this month further distanced itself from its legacy as a smartphone pioneer by shutting off software support for its legacy BB7 and BB10 devices, which it hasn’t made for years. (Some overseas manufacturers have licensed the brand for phones that typically run Google’s Android operating system.)

The company has struggled to reignite its share price under the leadership of Mr. Chen, and last year became one of a handful of so-called “meme stocks” to temporarily spike up in value.

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