TORONTO -- BlackBerry is abandoning a plan to sell itself and will raise about $1 billion from its largest shareholder and other institutional investors as it tries yet again to revive its fortunes.
The smartphone maker said Monday that Chief Executive Officer Thorsten Heins would leave in about two weeks, as soon as the private placement of convertible debentures closes.
His interim successor will be John Chen, the former CEO of Sybase, a database software company that SAP (SAP) acquired in 2010. Chen, who will also be BlackBerry's new executive chairman, joined private equity group Silver Lake as senior adviser a year ago.
The private placement could eventually increase the number of BlackBerry (BBRY) shares by as much as 20 percent, and the company's stock dropped 12 percent to $6.84 in morning Nasdaq trading.
BlackBerry's largest shareholder, Fairfax Financial Holdings, has agreed to buy $250 million of the seven-year subordinated debentures, which will be convertible into common shares at $10. BlackBerry didn't name the other institutional investors participating in the deal.
Waterloo, Ontario-based BlackBerry grew from a small technology startup into a multibillion-dollar company by pioneering on-the-go email. %VIRTUAL-article-sponsoredlinks%But having lost much of its market share to Apple's (AAPL) iPhone and devices that run Google's (GOOG) Android software, it has been seeking a buyer for months.
BlackBerry had held talks with a number of companies, including Cisco Systems (CSCO), Google, SAP, Lenovo Group, Samsung Electronics, LG Electronics and Intel (INTC) about selling parts or all of itself, Reuters previously reported
"Now we're back to the downward spiral," said BGC Partners analyst Colin Gillis. "They've got $1 billion more cash that buys them time. The drumbeat of negativity is likely to continue."
Fairfax announced a tentative $9-a-share offer for BlackBerry in late September, but Reuters reported Friday that it was struggling to fund the $4.7 billion bid.
Moody's had warned in September that the transaction would hurt Fairfax's credit profile because it would result in the conversion of a public equity investment into a private structure.
The structuring of the current deal gives Fairfax and the other investors flexibility as the financing is in the form of convertible debentures.
The investors have an option to buy up to an additional $250 million worth of debentures within 30 days following closing.
If the option is tapped and all the debentures are converted, the new stock would expand BlackBerry's outstanding share base by almost 20 percent.
"BlackBerry is an iconic brand with enormous potential," Chen said in the statement, "but it's going to take time, discipline and tough decisions to reclaim our success."
Apps That Manage Your Money For You
BlackBerry Calls Off Sale, Will Replace CEO
Mint made the Mac App Store's Best of 2012 list for a reason. This simple, clean app shows how much you are spending in each category of your budget by monitoring all of your transactions. We love signing in and getting a quick, dirty rundown of where our money has gone over the last week, and using their personalized budget tools to stay on track. We highly recommend adjusting your budgets for summer months. You might spend less on transportation when the weather is nice, and chances are you could use that extra cash to flesh out that restaurant tab, right?
This is the all-in-one financial organizer. Manage all of your accounts, from credit cards to magazine subscriptions, in one place and even make custom accounts for your rent or cleaning service. Get reminders for bill payments, and monitor all of your travel reward points, too. You'll always know what you owe, how much money you have and can plan for upcoming bills and expenses without having to sift through tons of paperwork.
If you want to isolate the expense tracker function of Mint in a super simple day-to-day app, then DailyCost is a great buy. A wide variety of categories lets users input all of their daily expenses. Holding your phone horizontally, you will be able to see graphs and statistics on your spending. The app also tracks your weekly and monthly spending by category and can be backed up to iCloud for Mac users, so you'll never lose your data.
If you're a heavy traveler, Toshl is an excellent expense and budget tracker. It works with any currency and lets you separate your travel budget from your day-to-day expenses. It comes with all the trappings of a regular money management app, too, such as bill organizer and alerts, and can be synced across all your devices.
Next time you organize a group activity, Tricount will split up the expenses for you. Create the expense report on your phone and organize by person, how much they owe, and then share via email so everyone knows their share. With options for expenses, balance, share, and configuration, the app does all of the math for you.
Never miss a bill payment again. This app reminds you when your payments are due, and lets you pay on the spot from a bank account or credit card, or you can schedule a payment for the future. Connect all of your accounts to the encrypted app and then view them all in one place for easy access and payment options. You'll never overdraft or miss a payment again.
Make and share payments with friends. This app uses the same technology to pay as LivingSocial, Uber and Airbnb. Pay with your debit card or transfer funds from a linked bank account, right to a friend's Venmo account. It is Verisign Certified.