OTTAWA â€" A combination of Canadian, American and Qatari investors are helping to finance Fairfax Financial Holding’s planned $1 billion investment in the struggling smartphone maker BlackBerry.
Fairfax, BlackBerry’s largest shareholder, announced the investment on Monday after its conditional offer to take BlackBerry private in a $4.7 billion deal had collapsed. Instead of buying the company, Fairfax will invest $1 billion through debt securities that can be converted into common shares at $10 a share.
The largest contribution of $300 million, will come from Canso Investment Counsel, a privately held money manager based north of Toronto in Richmond Hill, Ontario, according to a securities filing made on Thursday. Other investors include Mackenzie Financial, owned by Power Corporation of Montreal; Brookfield Asset Management of Toronto; Markel Corporation, based in Glen Allen, Va.; and Qatar Holding, an investment house started by the Qatar Investment Authority.
While Fairfax had trouble finding investors for its initial buyout plan, Canadian bankruptcy laws give the bond holders relatively greater security if the company collapses.
The infusion of money is intended to help stabilize BlackBerry which used about $500 million of its cash holdings during its last fiscal quarter. It still has $2.3 billion in cash and is expecting a tax refund of $500 million to $1 billion from the Canadian government.
But most analysts anticipate that the company will continue to consume cash at an increasing pace as it attempt to revitalize and reorganize its business.
Until now, BlackBerry has not held any long term debt. Reflecting the company’s currently uncertain state, the bonds carry a high interest rate of 6 percent.
If BlackBerry does find a buyer for its operations, it will have to pay the bond holders $135 million to $250 million depending on a variety of factors.
Also on Thursday, BlackBerry said it would pay John S. Chen, the former chief executive of Sybase who became its executive chairman on Monday, $1 million a year base salary plus a $2 million annual performance bonus and stock worth that vests over five years. Mr. Chen was brought into the company on Monday after Thorsten Heins, who has been BlackBerry’s chief executive since January 2012, was removed from his post.
Mr. Chen will remain the acting chief executive until a replacement for Mr. Heins is found.
