BlackBerry has announced that it will receive $1bn in funding from an investor group led by Fairfax Holdings, as plans to find a buyer for the ailing mobile firm have fallen flat.
In total, Fairfax has agreed to take on $250m of the $1bn investment, but initial talks about a $4.7bn buyout have collapsed.
The deal will see current BlackBerry chief executive, Thorsten Heins, step down and be replaced by John Chen, previously CEO of Sybase, who will serve as interim chief executive and executive chairman. The deal for the $1bn funding means the firm is not being sold and will continue in its current guise.
This has spooked investors as shares fell by 18 percent in pre-market trading as financial analysts see the inability to secure a complete buyout as a cause of concern for the future.
Nevertheless, Barbara Stymiest, chair of BlackBerry's board, tried to put a positive spin on the deal by claiming it proved there is still confidence in BlackBerry for the future and would help the company continue transitioning in the current market.
"The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders,” she said.
“This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position.”
The deal marks the end of the strategic review the company set out in August in order to secure its future. The chief executive of Fairfax, Prem Watsa, said he believed the deal was the best outcome for all concerned.
Chen said he was pleased to join BlackBerry but pleaded for time to take the company forward: "BlackBerry is an iconic brand with enormous potential - but it's going to take time, discipline and tough decisions to reclaim our success," he said.
"I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees."
BlackBerry will be hoping its long-term business base sees the funding as confidence it will not disappear anytime soon. The firm is putting its faith in the business market for its server technologies to support its future.
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