BlackBerry Announces Proposed Private Offering of $160 Million of Convertible Senior Notes

Rhea-AI Summary

BlackBerry Limited (NYSE: BB; TSX: BB) announced a private offering of $160 million aggregate principal amount of Convertible Senior Notes due 2029, with an option for an additional $25 million. The net proceeds will be used to fund the repayment of existing debentures and for general corporate purposes. The notes will mature on February 15, 2029, and will rank senior to BlackBerry's obligations under the existing debentures. The offering is subject to customary conditions, including approval from the Toronto Stock Exchange.

Insights

Financial Analyst

The announcement by BlackBerry Limited to issue $160 million in Convertible Senior Notes, with an additional option for purchasers to acquire up to $25 million more, signals a strategic move to refinance its debt obligations. This is particularly significant as it aims to address the upcoming maturity of its $150 million extendible convertible unsecured debentures due in February 2024. The choice of convertible notes is noteworthy as it offers potential upside to investors through conversion to equity, while also allowing BlackBerry to potentially reduce cash interest payments if investors opt for conversion.

The terms of the notes, including the interest rate and conversion rate, which will be set at the time of pricing, will be critical in determining the attractiveness of the offering to institutional investors. The decision to repay or repurchase existing debentures indicates a proactive approach to debt management, which can be seen as a positive signal to the market. However, the impact on BlackBerry's financial leverage and interest coverage ratios will depend on the final terms of the notes and the company's subsequent performance.

Market Research Analyst

BlackBerry's decision to conduct the offering under Rule 144A targets qualified institutional buyers, which typically indicates a level of sophistication and risk tolerance among the potential investors. This move could be interpreted as BlackBerry tapping into a more niche segment of the capital market that is familiar with such investment products. The private nature of the offering suggests BlackBerry is looking for a more discreet and potentially quicker way to secure funding, as opposed to a public offering.

While the offering may not immediately affect BlackBerry's stock price, the long-term implications could be significant if the conversion of notes to common shares leads to dilution of existing equity. Investors will be closely monitoring the conversion premium and the potential impact on share price if conversions occur. The market's reception of this news will likely be reflected in BlackBerry's stock performance in the short to medium term.

Legal Expert

The legal stipulations surrounding the offering are notable, particularly the exclusion from registration under the Securities Act of 1933. BlackBerry's reliance on exemptions indicates a strategic choice to streamline the offering process. However, the securities will be subject to restrictions on resale, limiting liquidity for investors and potentially affecting the notes' marketability.

The requirement for approval from the Toronto Stock Exchange is a standard regulatory step, ensuring that the offering meets specific listing criteria. The legal framework BlackBerry operates within, including compliance with securities laws in multiple jurisdictions, highlights the complexity of transnational financing operations and the importance of adhering to regulatory requirements to avoid legal repercussions.

WATERLOO, ON, Jan. 23, 2024 /PRNewswire/ -- BlackBerry Limited (NYSE: BB; TSX: BB) ("BlackBerry") announced today that it intends to offer, subject to market and other conditions, $160 million aggregate principal amount of Convertible Senior Notes due 2029 (the "notes") in a private offering. The notes will be offered only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and pursuant to prospectus exemptions in Canada and other jurisdictions. BlackBerry also expects to grant the initial purchasers of the notes the option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $25 million aggregate principal amount of the notes.

BlackBerry intends to use the net proceeds from the offering of the notes to fund the repayment or repurchase of its outstanding $150 million aggregate principal amount of 1.75% extendible convertible unsecured debentures due February 15, 2024 (the "Existing Debentures") and the remainder, if any, for general corporate purposes.

The notes will be BlackBerry's general unsecured obligations, ranking senior to BlackBerry's obligations under the Existing Debentures. The notes will mature on February 15, 2029, unless earlier converted, redeemed or repurchased. BlackBerry may satisfy any conversions of the notes by paying or delivering, as the case may be, cash, its common shares or a combination of cash and its common shares, at BlackBerry's election (or, in the case of any notes called for redemption that are converted during the related redemption period, solely its common shares). The interest rate on, the initial conversion rate of, and other terms of the notes will be determined at the time of pricing of the offering.

The closing of the offering will be subject to customary conditions, including approval from the Toronto Stock Exchange.

The offer and sale of the notes and the common shares issuable upon conversion of the notes, if any, have not been registered under the Securities Act or any state securities laws. Unless a subsequent sale is registered under the Securities Act, the notes and the common shares issuable upon conversion of the notes, if any, may only be offered or sold in the United States in a transaction that is exempt from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of these securities nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction. Any offers of the notes will be made only to persons reasonably believed to be qualified institutional buyers by means of a private offering memorandum in accordance with Rule 144A under the Securities Act. The notes will be offered in Canada and other jurisdictions under available prospectus exemptions.

About BlackBerry

BlackBerry (NYSE: BB; TSX: BB) provides intelligent security software and services to enterprises and governments around the world. The company's software powers over 235M vehicles. Based in Waterloo, Ontario, the company leverages AI and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy solutions, and is a leader in the areas of endpoint security management, encryption, and embedded systems. BlackBerry's vision is clear - to secure a connected future you can trust.

BlackBerry. Intelligent Security. Everywhere.

Cautionary Note Regarding Forward-Looking Statements 

Certain statements in this press release, including, among others: the proposed terms of the notes; the size of the notes offering, including the potential exercise of the initial purchasers' option to purchase additional notes and the expected use of the net proceeds from the sale of the notes, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Forward-looking statements are often characterized by the use of words such as "believes," "estimates," "expects," "projects," "may," "will," "intends," "plans," "should," or "anticipates," and similar expressions. All forward-looking statements in this press release are based on Blackberry's current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements.

Additional factors that could cause results to differ materially from those projected in the forward-looking statements are contained in BlackBerry's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, including in the "Cautionary Note Regarding Forward-Looking Statements" section of BlackBerry's MD&A (copies of which may be obtained at www.sedarplus.ca or www.sec.gov). All of these factors should be considered carefully, and readers should not place undue reliance on BlackBerry's forward-looking statements. Forward-looking statements are intended to enable BlackBerry's shareholders to view the anticipated performance and prospects of BlackBerry from management's perspective at the time such statements are made, and they are subject to the risks that are inherent in all forward-looking statements, as described above, as well as difficulties in forecasting BlackBerry's financial results and performance for future periods, particularly over longer periods, given changes in technology and BlackBerry's business strategy, evolving industry standards, intense competition and short product life cycles that characterize the industries in which BlackBerry operates. BlackBerry has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Investor Contact:
BlackBerry Investor Relations
+1 (519) 888-7465
investorrelations@blackberry.com

Media Contact:
BlackBerry Media Relations
+1 (519) 597-7273
mediarelations@blackberry.com

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SOURCE BlackBerry Limited

FAQ

What is BlackBerry's ticker symbol?

BlackBerry's ticker symbol is BB.

What is the purpose of the $160 million offering?

The net proceeds from the offering will be used to fund the repayment of BlackBerry's outstanding $150 million aggregate principal amount of 1.75% extendible convertible unsecured debentures due February 15, 2024, and for general corporate purposes.

What are the terms of the notes being offered?

The notes will mature on February 15, 2029, and will rank senior to BlackBerry's obligations under the existing debentures. The interest rate, initial conversion rate, and other terms will be determined at the time of pricing of the offering.

What is required for the closing of the offering?

The closing of the offering will be subject to customary conditions, including approval from the Toronto Stock Exchange.

Are the notes and common shares issuable upon conversion registered under the Securities Act?

No, the offer and sale of the notes and the common shares issuable upon conversion of the notes have not been registered under the Securities Act or any state securities laws.

What does the press release not constitute?

The press release does not constitute an offer to sell or a solicitation of an offer to buy any of these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.