Updated from 8:46 a.m. EST
NEW YORK (TheStreet) -- BlackBerry (BBRY) shares are plunging, down 16.5% to $6.49 as the portable device maker is abandoning its sale to Fairfax Financial Holdings. Instead, the Waterloo, Canada-based technology company is selling $1 billion worth of convertible debt with Fairfax buying $250 million worth of the offering and CEO Thorsten Heins on his way out.
Under terms of the transaction, the debt will have a 28.7% premium to BlackBerry's shares as of Nov. 1, 2013, or $10 per share. The debt has a term of seven years, have a coupon of 6%, and represent approximately 16% of all BlackBerry's common stock, after the conversion.
"Upon the closing of the transaction, John S. Chen will be appointed Executive Chair of BlackBerry's Board of Directors and, in that role, will be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry," the company said in a press release. "Prem Watsa, Chairman and CEO of Fairfax, will be appointed Lead Director and Chair of the Compensation, Nomination and Governance Committee and Thorsten Heins and David Kerr intend to resign from the Board at closing."
Chen is the former CEO of Sybase, which was acquired by SAP in 2010. Heins will step down as BlackBerry's CEO, and will be replaced on the interim by Chen, while the company looks for a new CEO.
"I am pleased to join a company with as much potential as BlackBerry," said Chen in the release. "BlackBerry is an iconic brand with enormous potential -- but it's going to take time, discipline and tough decisions to reclaim our success. 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."