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Nov 05, 2013 at 12:01pm IST

BlackBerry abandons sale plan, will replace CEO Thorsten Heins

BlackBerry Ltd is abandoning a plan to sell itself and instead will replace its chief executive officer and raise about $1 billion from institutional investors, including its largest shareholder, the smartphone maker said on Monday.

Shares of BlackBerry dropped 16.3 per cent to $6.50 in premarket trading. The company said it would raise the money with a private placement of convertible debentures.

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John Chen will be appointed executive chairman and will be interim CEO while the company looks for a new leader. He is the former CEO of Sybase, a database software company that SAP AG acquired in 2010.

BlackBerry abandons sale plan, will replace CEO Thorsten Heins

In this May 14, 2013 photo, Thorsten Heins, president and CEO at BlackBerry, speaks at a conference in Orlando, Florida. (AP Photo)

Chen joined private equity group Silver Lake as senior adviser last year.

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BlackBerry grew from a small technology startup into a multibillion-dollar company by pioneering on-the-go email, but it has lost much of its market share to Apple Inc's iPhone and devices that run Google Inc's Android software.

BlackBerry's largest shareholder, Fairfax Financial Holdings Ltd, will buy $250 million of the debentures. BlackBerry said the subordinated debentures would be convertible into common shares at $10 and have a seven-year term.

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Fairfax announced a tentative $9-a-share offer for Waterloo, Ontario-based BlackBerry in late September. But Reuters said on Friday that Fairfax was struggling to finance the $4.7 billion bid.