BlackBerry Completes Debt Refinancing

BlackBerry has completed the redemption of all of its 3.75% unsecured convertible debentures (TSX: BB.DB.V) (the “3.75% Debentures”) on September 1, 2020. None of the 3.75% Debentures were converted into common shares of BlackBerry prior to redemption.

BlackBerry has also completed the private placement of US$365,000,000 aggregate principal amount of 1.75% unsecured convertible debentures to Hamblin Watsa Investment Counsel Ltd., in its capacity as investment manager of Fairfax Financial Holdings Limited and another institutional investor.

The maturity date, conversion price and other terms of the 1.75% Debentures, including the “blocker” provision agreed in the original negotiations, remained as previously described on July 22 and and updated on August 21, 2020.  The previously disclosed “standstill” provision agreed with Fairfax also remained applicable.  

Based on the number of common shares of BlackBerry (“Common Shares”) currently outstanding, if all US$365 million of the 1.75% Debentures were converted, the Common Shares issued upon conversion would represent approximately 9.86% of the Common Shares outstanding after giving effect to the conversion.

When BlackBerry initially announced the proposed private placement of 1.75% Debentures on July 22, BlackBerry says it understood that the Toronto Stock Exchange (the “TSX”) did not consider the transaction to be subject to the “insider participation limit” under TSX rules, as they claim Fairfax is not an insider of the company; therefore, the transaction would be exempt from shareholder approval requirements under TSX rules. 

However, after a BlackBerry Shareholder objected to Related Party Transactions with Fairfax on August 25, 2020, the TSX advised BlackBerry on August 27, 2020, that this limit would be applied in view of the relationship between Mr. V. Prem Watsa, a director of the Company, and Fairfax, reversing the prior conditional approval of the original transaction by the TSX.

This forced BlackBerry to revise the proposals with BlackBerry and Fairfax agreeing that Fairfax will subscribe for US$330 million of 1.75% Debentures, reducing the aggregate subscription price in the private placement from US$535 million, as previously announced on July 22, 2020, to US$365 million.