Fairfax has no comment on BlackBerry deal as deadline looms

Fairfax Financial Holdings Ltd. had no comment on any prospective deal for BlackBerry, as the deadline approaches for it to confirm its offer for the Waterloo, Ont.-based smartphone company.

Monday deadline for $9 a share deal for smartphone maker, but Fairfax is recording steep losses

Fairfax Financial CEO Prem Watsa speaks at the company's annual general meeting in Toronto on April 11. Fairfax announced $571 million in losses for the third quarter. (Frank Gunn/Canadian Press)

Fairfax Financial Holdings Ltd. had no comment on any prospective deal for BlackBerry, as the deadline approaches for it to confirm its offer for the Waterloo, Ont.-based smartphone company.

On Sept. 23, Fairfax announced a letter of intent to lead a consortium that would offer $4.7 billion US, or $9 US a share, for Blackberry.

Fairfax, which already owns approximately 10 per cent of the publicly traded shares of BlackBerry, said it would need six weeks to do due diligence, with its offer to be confirmed or expire by Nov. 4. But as Fairfax released its quarterly results on Friday, Fairfax CEO Prem Watsa said he could say nothing more about the deal.

“We cannot make any comments on Blackberry. We have a bid for the company so we really cannot make any more comments on it,” he said during a conference call.

On Friday, Fairfax announced a net loss of $571.7 million or $29.02 net loss per diluted share in the third quarter, compared with net earnings of $33.4 million or 84 cents a share in the third quarter of 2012

The poor results reflected losses, mostly unrealized, on its investment portfolio including the hedge contracts it bought against swings in the future values of its holdings.

“We were affected in the quarter with mark-to-market losses from bonds (because of rising interest rates in the quarter) and a mismatch in our equity portfolios between our common stocks and our hedges,” Watsa said.

Mark-to-market is a bookkeeping term used when a company values assets and liabilities at their current worth, even though they might not be drawn upon for years down the road.

Watsa said he expects the underlying investments the company holds will be profitable in the long-term, but it has hedged its portfolio because of its concern about the poor underlying economic fundamentals in Europe and the U.S.

The loss came as the company saw its underwriting profits grow to $104.7 million US due to an improved performance from its insurance operations.

BlackBerry free to weigh other offers

Fairfax has said it wants to take BlackBerry private, so the troubled smartphone maker can restructure away from the demands of the public markets.

But in the weeks after it made its offer public, BlackBerry stock has been beaten down below $8 by doubts over whether the deal would go through.

Until Nov. 4, BlackBerry is free to weigh offers from other potential bidders. Several companies have asked to see the company’s books to determine whether there were attractive assets within BlackBerry.

China’s Lenovo Group, Cerberus Capital Management LP and BlackBerry co-founders Mike Lazaridis and Doug Fregin are among the groups that have expressed interest in BlackBerry. There were reports earlier this week that BlackBerry had approached Facebook.

But a firm deal has yet to be announced.

In one bright spot for the Waterloo company, its BBM messaging system app rolled out to Android and iPhone handsets last week and appeared to be very popular, possibly because of its reputation as more secure than other systems.

The company continues to cut staff and now has less than 1 per cent of the world handset market.


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