Watsa gambles a further $250m on BlackBerry debt

Does he know something?

source: Reuters/Aaron Harris

watsa - does he know something?

Struggling BlackBerry has been thrown another lifeline by former director Prem Watsa, whose investment vehicle Fairfax Financial Holdings has agreed to buy a further £150 million’s ($250 million) worth of the Canadian smartphone manufacturer’s debt. Watsa already owns a majority stake in BlackBerry and was widely expected to take it over. But then three months ago, the deal unexpectedly crashed, sending BlackBerry’s shares into a nosedive.The disaster also led to the then CEO, Thorsten Heins resigning, with his job taken up by former Sybase boss John Chen.

Watsa’s money will give BlackBerry a much needed cash injection as it fights to survive.

It also means Watsa is doubling Fairfax’s take up of BlackBerry’s debt, adding to its existing 9.9 per cent stake in the business.

Ultimately the move by Watsa – dubbed the Warren Buffet of the North – could be a shrewd move.

Though competitors seem to have little interest in acquiring BlackBerry’s hardware side, its software assets are another matter with a vast library of patents and highly respected secure messaging system.

Meanwhile BlackBerry is battling on to stabilise its finances, with news last month [December 2013] that cheaper versions of its handsets could soon be made in China under a deal with Foxconn.

This hinted that the company could be shifting some of its manufacturing operations abroad to where labour costs are significantly lower.

About Dave Evans

Dave Evans is a long established commentator on both the IT and cellular industries. His current focus is on share price trends within the sector. You can email him here
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