BlackBerry Ltd. (NYSE:BB) witnessed a significant downturn this week, with its shares reaching their lowest point in approximately 20 years. The software company opted for a convertible senior notes offering as part of its strategy to reduce debt, leading to a notable decline in its Toronto-listed shares.
Once hailed as a Canadian tech powerhouse, BlackBerry’s Toronto-listed shares experienced a substantial 20% drop on Wednesday, reaching C$3.94 and closing at its lowest level since May 2003. In the late 2000s, BlackBerry dominated the global smartphone market, boasting a peak market value exceeding C$80 billion. However, its current valuation stands at about C$2.3 billion.
BlackBerry augmented the convertible note offering from $160 million to $175 million on Thursday, setting a 3% coupon and $3.88 conversion price for the 5-year convertible notes. The company clarified in a press release that the net proceeds from the offering would be allocated for the repayment or repurchase of its existing $150 million debentures due on Feb. 15, with the remainder earmarked for general corporate purposes.
RBC Dominion Securities analyst Paul Treiber offered a relatively optimistic perspective, noting that the pricing of the offering appeared better than initially feared.
This debt offering follows a strategic shift by the newly appointed CEO, John Giamatteo, who recently stepped back from the previously planned spin-off of BlackBerry’s Internet of Things business. This decision marks a reversal of the earlier plans laid out by John Chen, who held the chief executive position for nearly a decade. The move reflects BlackBerry’s dynamic efforts to navigate its financial landscape under new leadership.
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