BlackBerry’s announcement that it will be restructuring its debt is “smart financial management,” one tech industry analyst says.
“It gives BlackBerry even more runway as it continues to manage its way through what’s become a very protracted transition period,” CTV technology analyst Carmi Levy said Friday.
BlackBerry announced Friday that it will be redeeming US$1.245 billion worth of unsecured convertible debentures, which can be converted into shares in the company at a price of US$10 per share.
Additionally, the Waterloo-based company said that it had signed a deal with its second-largest shareholder, Fairfax Financial Holdings, as well as other investors to raise US$605 million in new convertible debentures, which will come due in 2020.
If all of those debentures were converted into shares, they would represent about 11.57 per cent of the company’s total shares outstanding.
In a statement, BlackBerry CEO John Chen said the restructuring would let the company “significantly reduce our interest expense and potential future dilution for our shareholders.”
Levy praised Chen for keeping his eye on BlackBerry’s balance sheet during a time of “growing speculation” of a possible takeover attempt, despite denials by the company.
“The rosier outlook definitely opens up all sorts of doors that were once closed, and I’d expect today’s announcement to further spur this kind of talk,” he said.
Best known for its handset manufacturing business, BlackBerry has been trying to diversify its options in recent times.
Last month, it unveiled plans for the DTEK50 – which it said would be the most secure Android smartphone available – and followed that up by releasing some of its apps into the Google Play store.
The company has also made acquisitions with eyes on the Internet of Things field and cybersecurity consulting.
With files from The Canadian Press
