Fairfax - Blackberry 13D/A

[Nnejad]

For those interested.

http://secfilings.com/searchresultswide.aspx?link=1&filingid=9812663

 

 

Item 4.                          Purpose of Transaction.

 

 

 

Item 4 of the Schedule 13D is hereby amended and supplemented by inserting the following immediately prior to the last paragraph of Item 4 and by deleting in its entirety such last paragraph of Item 4:

 

“Under the terms of a subscription agreement with BlackBerry dated November 4, 2013, Fairfax agreed that until November 13, 2014 neither it nor its affiliates would beneficially own more than 19.9% or less than 9.9% of the outstanding Shares.  As previously announced on January 8, 2014, Fairfax determined to sell Shares over time in order to rebalance its ownership in BlackBerry, subject to the above-noted restrictions.  This previously announced Share sale is concluded and the current rebalancing is complete.  In the future, Fairfax may determine it is necessary to continue with further rebalancing, subject to the above-noted restrictions.”

 

Item 5.                          Interest in Securities of the Issuer.

 

Item 5© of the Schedule 13D is hereby amended and restated in its entirety to read as follows:

 

“©                            Between January 29, 2014 and February 24, 2014, Northbridge Commercial Insurance Corporation sold 250,000 Shares on the open market at an average price of $10.03 per share, Northbridge General Insurance Corporation sold 1,250,000 Shares on the open market at an average price of $10.03 per share, United States Fire Insurance Company sold 500,000 Shares on the open market at an average price of $10.03 per share, Advent Underwriting Limited sold 700,000 Shares on the open market at an average price of $10.03 per share, Odyssey Reinsurance Company sold 1,500,000 Shares on the open market at an average price of $10.03 per share, TIG Insurance Company sold 500,000 Shares on the open market at an average price of $10.03 per share and Zenith Insurance Company sold 500,000 Shares on the open market at an average price of $10.03 per share.”

[Guest Dazel]

http://canadianinsider.com/node/7?ticker=BB

 

why the discrepency?

 

It appears as though they are adding at$10.04

 

dazel

[Nnejad]

Off of memory, I think they subscribed to more of the BBRY convertible debt in January. Per the 13D, it seems like Fairfax is a trimming of some of its shares so its effective ownership stays below 19%.

 

“Under the terms of a subscription agreement with BlackBerry dated November 4, 2013, Fairfax agreed that until November 13, 2014 neither it nor its affiliates would beneficially own more than 19.9% or less than 9.9% of the outstanding Shares.  As previously announced on January 8, 2014, Fairfax determined to sell Shares over time in order to rebalance its ownership in BlackBerry, subject to the above-noted restrictions.  This previously announced Share sale is concluded and the current rebalancing is complete.  In the future, Fairfax may determine it is necessary to continue with further rebalancing, subject to the above-noted restrictions.”

 

I'd trust the 13D. The confusion probably comes from some reporting issue related to the convertible debt. Here's a link to a link to a Globe article which probably explains it in more detail (subscription required).

 

http://www.techinvestornews.com/Mobile/Latest-Mobile-News/fairfax-not-bumping-up-stake-in-blackberry

 

[Guest Dazel]

 

Thanks.

[TwoCitiesCapital]

It appears to me if they're swapping the exposure. They use to have 51 million common shares with an average price around $14. Then they bought another 50 million or so through convertible debt with a strike of $10. They've swapped their exposure into high yielding debt that is convertible into the same underlying shares with a lower average cost then their current holdings.

 

They accrue more upside potential, get paid a handsome coupon to wait, AND can take around a $150M tax loss on the shares that they sold due to FIFO...Brilliant.

 

I doubt they'll sell all 51M of their common at this point, but I wouldn't be surprised to see them do that over time. It reduces risk from a concentrated position in a troubled tech co, allows for tax write offs, establishes a lower average cost, and they will still maintain their 9.9% via the converts and a handful of shares.