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Fairfax buying another $250M worth of BlackBerry notes

  • Prem Watsa's Fairfax Financial has agreed to buy another $250M worth of   BlackBerry (BBRY +0.6%) convertible debt. The purchase stems from an option tied to BlackBerry's $1B November convertible debt private placement, which was led by Fairfax. (PR)
  • The debt sold through the private placement featured a yield of 6%, and a conversion price of $10/share (17% above current levels).
  • BlackBerry had $3.2B in cash/investments at the end of its November quarter, and (thanks to the placement) $994M in debt.
  • Yesterday: AT&T promises BlackBerry support, company to focus on keyboard phones
Comments (44)
  • pat45
    , contributor
    Comments (288) | Send Message
     
    Gee more stock dilution... I knew they would need money after that huge loss.
    8 Jan, 03:02 PM Reply Like
  • Dantes_Will
    , contributor
    Comments (323) | Send Message
     
    This is just the tip of the iceberg.

     

    Watsa has no intention of turning BBRY around.

     

    Watsa and Fairfax's end game with BBRY is to load BBRY with debt in exchange for dilution and a ridiculous conversion price, at the expense of shareholders.

     

    Watsa now controls the puppet board and personally placed his head puppet, John Chen to sell the "turnaround story". Watsa can sell debt and shares to himself at whatever price he can, and he will keep on doing this in the coming year.

     

    All while the bag holders are being sold a fraud feel good story. Wonder why John Chen has a HUGE golden parachute built into his contract?
    8 Jan, 03:24 PM Reply Like
  • Arduino_RaspberryPi
    , contributor
    Comments (376) | Send Message
     
    "Watsa has no intention of turning BBRY around." And you know this how?
    8 Jan, 05:55 PM Reply Like
  • Mr. Knowitall
    , contributor
    Comments (7343) | Send Message
     
    @Dantes

     

    "All while the bag holders are being sold a fraud feel good story."

     

    What's funny to me is that the feel good story is itself a red flag.
    I mean who finds comfort in a CEO that says:

     

    "I personally love the keyboards," Chen said, "so you will look to BlackBerry going forward doing keyboards, I wouldn't use the word 'exclusively,' but predominantly."

     

    'Being Retro' works for music and clothes, but not for technology.
    This is a terrible idea.
    8 Jan, 07:43 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Pat, Mr Knowitall,
    Somebody has to pay for my next car, guess what, I volunteered both of you.
    David, where r u, good news, i did not forget about u buddy. You're first in line.
    John Chen will explain the details fellas :)
    8 Jan, 09:44 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Arduino,
    U r kicking some major ars here. Way to go my friend!
    8 Jan, 09:46 PM Reply Like
  • middleaged1
    , contributor
    Comments (18) | Send Message
     
    This can't be good for the average investor.
    8 Jan, 03:12 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Biggest investor just bought another quarter billion of Bbry at $10 per share. It is called "backwardation", look it up, it is always good for investors like me.
    8 Jan, 09:54 PM Reply Like
  • Mr. Knowitall
    , contributor
    Comments (7343) | Send Message
     
    [Investopedia explains 'Backwardation'

     

    When backwardation does occur in a futures market it has been suggested that an individual in the short position would benefit the most by delivering as late as possible.] http://bit.ly/19f8V8m

     

    Okay, I looked it up. So tell me how this benefits you.

     

    To me it's a simple matter if dilution. The more convertible debentures are sold and converted to shares, the more diluted your shares become. Which by the way, is bad for investors like you.
    9 Jan, 12:01 AM Reply Like
  • mapshop1@optonline.net
    , contributor
    Comments (270) | Send Message
     
    Mr. KIA says:

     

    "To me it's a simple matter if dilution."

     

    If conversion price is higher than market price its not dilutive, its anti-dilutive.
    9 Jan, 11:41 AM Reply Like
  • David653
    , contributor
    Comments (1352) | Send Message
     
    well they have to pay the new executives.
    8 Jan, 03:12 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    They r certainly not gonna pay u David :)
    8 Jan, 10:07 PM Reply Like
  • Cliff Hilton
    , contributor
    Comments (1410) | Send Message
     
    And you would want 17% on a quarter million in a few months? Shorts have been cleaning up, why not an owner?
    8 Jan, 03:15 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    U are the living proof for parallel reality :)
    Shorts have been cleaning up their pockets since 50% from the bottom, thats just for starters, another 100% coming by spring.
    8 Jan, 09:58 PM Reply Like
  • Arduino_RaspberryPi
    , contributor
    Comments (376) | Send Message
     
    $250,000,000 cash injection = rocket fuel. Wonder if there will be a big announcement at CES ? Hopefully the Q30 will be announced soon. I'm thinking of going keyboard.
    8 Jan, 03:27 PM Reply Like
  • mikebator
    , contributor
    Comments (797) | Send Message
     
    @ard

     

    Z30 is amazing. Loved my Q10 but my eyes have recently gone Waco so I switched and live it. Both have been dropped and the Q10 had 2 sever OMG drops, one down the skydome stairs and one face first in the concrete. Solid for sure.
    8 Jan, 03:51 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    I dropped my phone from 2 feet and it cracked, too embarassed to say the brand, lets just say my not blackberry phone.
    8 Jan, 10:45 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1007) | Send Message
     
    Prem Watsa has a lot in it now---I wonder what he sees for the future?
    8 Jan, 03:41 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Contrarian, he sees 30 Billion market cap in 3-5 years. He is quite a pessimist :)
    8 Jan, 09:49 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1007) | Send Message
     
    Andy,
    Two old cliches are apropos: "follow the money" and "if you can't beat them, join them" ie
    follow Prem Watsa--1.5 billion insider bet---and Foxconn and Apple is now Foxconn and Blackberry--(if you can't beat them, join them) John Chen, Terry Gou, Foxconn and Blackberry=
    great move. Watsa seems to like what he sees.
    9 Jan, 12:10 PM Reply Like
  • Crispin_in_Waterloo
    , contributor
    Comments (986) | Send Message
     
    Watsa sees a good turn around with enough cash in place to make it happen. The Foxconn deal was done more than a year ago and Chen has probably been in the loop about as long. Very interesting selection of staff.

     

    Those complaining about PW being able to convert to shares at $10 (presumably when it is $15) should have loaded up when they were $6. It is not like you weren't given the chance.
    8 Jan, 04:02 PM Reply Like
  • RHMASSING
    , contributor
    Comments (224) | Send Message
     
    It is absolutely comical to see a few shorts immediately posted to talk about "dilution" and how PW is to exploit the demise of BBRY with this additional investment, instead of seeing it as his vote of confidence after seeing how JC has operated with decisive actions to turn around the co. These hedge fund guys are very smart and will never put in good money after the bad. In a way this infusion of money with its warrants effectively put a floor for the share price at $10, the conversion price for shares. You think they will be satisfied by that puny 15% price appreciation? These guys look for at least tripling their investment, so be prepared for BBRY's share to go above $20 in at most two years. In the meantime, shorts will continue to be squeezed and wait for BBRY's bankruptcy. Good luck for that.
    8 Jan, 04:36 PM Reply Like
  • Crispin_in_Waterloo
    , contributor
    Comments (986) | Send Message
     
    This is the third time they have put up money or an offer at $10 minimum.
    9 Jan, 12:11 PM Reply Like
  • rocketship9
    , contributor
    Comments (103) | Send Message
     
    More complete insanity from the most incompetent company in the world. Concentrating on keyboard phones? Are you @#$%@ing kidding me? All you Z30 enthusiasts with your daily proclamations of smartphone superiority ought to ask your leader what the he(ll)ck is he doing.
    8 Jan, 04:47 PM Reply Like
  • bud zeedee
    , contributor
    Comments (195) | Send Message
     
    Do you have a computer? Has it a keyboard?
    8 Jan, 04:56 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Nobody cancels Z30, Chen commented that he likes keyboard. I am typing this using touchscreen and i absolutely hate it. I will still buy the Z30. Or the Porshe designed BB, saw it in San Fransisco Porshe store, but that one is like 2 grand but it is gorgeous! Look it up, it is way cool.
    8 Jan, 10:29 PM Reply Like
  • robnaro
    , contributor
    Comments (20) | Send Message
     
    I must be missing something on the dilution argument... please be gentle when you explain this to me but how is this possibly a bad thing for the shareholder at this point? The way I see it is the reverse of a share buyback. If I am an owner in blackberry (which I am to a very minute degree) and someone comes along and offers to purchase $250 million in new shares at a 17% premium to the market why on God's green earth would I say no? I get that its only an option but I hope and pray they exercise it. It may increase shares outstanding but at a $10/share valuation it increases owners equity much more. If the stock price was currently $20 of course I would be upset but damn sell as much as you can with that valuation. And if the stock goes back down to $6 buy it all back.
    8 Jan, 05:24 PM Reply Like
  • Arduino_RaspberryPi
    , contributor
    Comments (376) | Send Message
     
    Your argument is very sound in my opinion. Why would he convert if he thought it would go back down below 10 dollars? You would think that he believes it will go way above 10 dollars and he'll have the opportunity to buy it at that lower price. It would be nice if there was a clause that says he can't sell those shares for some fixed time period, but he's got a lot of skin in the game, so I don't think his intention would be to convert and dump right away. That would only hurt his own very large position. He's a long term value investor. Imagine it goes to 20 bucks or higher and stays there. He can continue to collect his 6% and when he desires exercise his option to purchase at 10 bucks. His success is tied with BlackBerry's and other shareholders' success. I like this.
    8 Jan, 06:03 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Robnaro,
    Your intuituon is great! The dilutuon commenter has no clue. We r golden here and going higher, much higher. There r still people out there that HAVE TO BUY 30% of your shares, 30% of my shares, 30% if all shares, no matter at what price! I am not selling, and Fairfax, the biggest holder, is obviosly not selling, they only buying :)
    8 Jan, 10:22 PM Reply Like
  • mapshop1@optonline.net
    , contributor
    Comments (270) | Send Message
     
    Damned if you do, and damned if you don't.

     

    Placing the 250, there's those that will weave the story that they 'need the cash'. If they hadn't placed the 250, the story would have been that no one can be found that has confidence in the turn-around.

     

    With that said, a 1/4 billion more cash is a nice thing to have in the current turn-around circumstances. It would have been nice if they had found a strategic investor to take it. But Watsa taking it ain't so bad. Better than a strictly financial investor. He knows the guts of this company inside out. I think him putting that much additional money at risk is a good window into the expectations of those that are in the know.
    8 Jan, 05:29 PM Reply Like
  • mapshop1@optonline.net
    , contributor
    Comments (270) | Send Message
     
    I guess another interesting question is whether Watsa even tried to get someone else to take the 250, or was he intending to take it himself the whole time.
    11 Jan, 01:24 PM Reply Like
  • Trader888
    , contributor
    Comments (52) | Send Message
     
    Fairfax ... what ever they say could be a LIE/PUMP .. remember the big buy out for 9.00 where BBRY sold - off the day before the so called Fairfax buyout to only find out the reason for the SELLOFF was insiders were selling because there was no Fairfax buy-out it was canceled .. insiders profited by selling off what they had. > I Remember very well I was long >
    8 Jan, 06:12 PM Reply Like
  • Arduino_RaspberryPi
    , contributor
    Comments (376) | Send Message
     
    BBRY was at $9.12 this morning. Maybe you should have held on? One thing I know is that I've NEVER bought a stock that didn't go down after I first bought it. You have to expect the market to play you using optimized graph theory based algorithms. Every position is tracked. You have to expect a good amount of pain and don't get greedy. Buy in a company with management and products you believe in. Then be patient.
    8 Jan, 06:18 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1007) | Send Message
     
    you said it Arduino--time and patience is the mantra on this one!
    8 Jan, 08:39 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8137) | Send Message
     
    Does Fairfax have the option of loading up on ITM call options?
    8 Jan, 08:17 PM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Blackberry is deep deep deep value, you are gonna love it! :)
    Im sorry i cant answer your question, based on some of your comments i suspect u know much more than me about in the money call options
    8 Jan, 10:51 PM Reply Like
  • sansot
    , contributor
    Comment (1) | Send Message
     
    So what is the recomendattion, buy or sell,,,???
    9 Jan, 01:00 AM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    Recommendation is, figure out how much you want to invest, divide that by 10 and invest one chunk per week, try to catch low points but at this level it is not that important. You can safely continue to buy to $11-12 to double your money in 1.5 years. And don't stress down days, just buy some more. My lowest buy was just above $6 and I am still buying.
    9 Jan, 12:46 PM Reply Like
  • Mr. Knowitall
    , contributor
    Comments (7343) | Send Message
     
    Andy, don't you feel that you should be cautioning sansot of the risks involved?
    BlackBerry is a very risky bet.
    9 Jan, 05:41 PM Reply Like
  • Redrut
    , contributor
    Comments (1301) | Send Message
     
    Absolutely scandalous that the company allowed PW to get this done considering the current share price, ridiculous
    9 Jan, 02:00 AM Reply Like
  • Crispin_in_Waterloo
    , contributor
    Comments (986) | Send Message
     
    Redrut, you are crying 'foul' before time.

     

    It had to be done before the price reached $10, which was forced upon him by the rapid rise in the stock in the past few weeks. Once the price reaches 10, it will have to be $11.50 or more for the next go-round.
    9 Jan, 12:17 PM Reply Like
  • BLACKBERRY13
    , contributor
    Comments (12) | Send Message
     
    It is not at all surprising to me that the additional tranche of convertible debenture financing has materialised as I and others forecast-it represents conviction and confidence in Blackberry and its chairman for the future .I have an appointment to get measured for a suit like Mr Chen financed from my BBRY profits from the share price increase -leveraged of course against the stock value increase so I don't loose out on the future price appreciation which I confidently expect .I think I will go bespoke -since I can afford it .
    9 Jan, 05:28 AM Reply Like
  • andypochta1
    , contributor
    Comments (1046) | Send Message
     
    I wish we'd see more comments from you.
    May I ask do you short anything currently?
    I had to look up what "meritorious" means, thanks for teaching me something new.
    9 Jan, 12:51 PM Reply Like
  • BLACKBERRY13
    , contributor
    Comments (12) | Send Message
     
    Andy
    Thank you -no shorting currently -too busy with my tailor appointment at the moment -nice to see analsts upgrades today .
    10 Jan, 04:14 PM Reply Like
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