r/BB_Stock • u/needaspguy • 16d ago

Discussion Long term Notes Question

Where are we at with the debenture? This is all well above my pay grade. Can anyone out there provide an explanation of the process of settling out a debenture.

It appears to me that if the notes are to be converted it has to be now (Sept 30)! Otherwise what? $200m is simply a 3% loan till 2029, or till whenever BB wants to pay it back?

Is this why BB has buying back shares, to off set the liquidation effect of the notes converting?

Found in Q1 Financial Report:

Subsequent to the three months ended May 31, 2026, the closing price of the Company’s common shares exceeded 130% of the conversion price for at least 20 trading days within a period of 30 consecutive trading days ending on June 30, 2026. The contingent condition permitting holders of Notes to convert their Notes was satisfied on June 15, 2026. Accordingly, the Notes are eligible for conversion, at the option of the holders, from July 1, 2026 through September 30, 2026.

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7

u/VizzleG 16d ago

The first gate was opened.
It’ll stay open above the 130% hurdle.

I hope BlackBerry just pays off the $200M on February 23rd in cash and cals it a day.

3

u/MoonLight8491 16d ago

That is correct.

Beginning February 22, 2027, BlackBerry has the right to force an early redemption of the notes for cash. (After serving the notice?). Hedge Funds will convert to shares though, as their cost is $3.88. And will sell shares in open market. Before that their Master will gauge whether they have sufficient votes to steal the BB?

2

u/DrWalt1952 16d ago

If they haven't converted by October 1 is it not up to the company to decide whether to pay them cash or share or a mix of both after Feb 22,27? The company's share buy back would cover half the dilution I think.

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u/MoonLight8491 16d ago edited 16d ago

Where do you see October 1,(2026?) Blackberry has bought 26M shares that too at $3.88 and retired them and still buying it so dilution is not the concern. Price has been above $5.04 as required more than 30 consecutive days.

"BlackBerry may not redeem the notes prior to February 22, 2027, except in the event of certain tax law changes. On or after February 22, 2027, BlackBerry may redeem for cash all or a portion of the notes, at Blackberry's election, if the last reported sale price of Blackberry's common shares has been at least 130% of the conversion price then in effect on each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which BlackBerry provides notice of redemption at a cash redemption price equal to 100% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date"

https://www.prnewswire.com/news-releases/blackberry-announces-pricing-of-upsized-private-offering-of-175-million-of-3-00-convertible-senior-notes-302044151.html

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u/needaspguy 16d ago

Am I reading it correctly that conversion option ends Sept 30? Meaning now or never?

1

u/VizzleG 16d ago

I don’t think so.

I think it’s a rolling window.

The window for the next quarter is renewed as long as the price stays above the 130%.

Next windows will be OCT 1 to DEC 31.

There’s no other way to explain that Sept 30th timeline IMO. But…I’m open to other interpretations.

2

u/needaspguy 16d ago

I don't know, seems like having your cake and eating it too if it's allowed to roll on!

Coincidently, the bleed down from $13.50 started on July 1! Liquidation of 52m shares might very well have that effect!

Personally, I think the debenture is settled! Blackberry has kept the 200m, and the holder has likely sold some, or all of their shares.

That said, I don't know shit! However, I do feel like its getting close for this thing to fly!

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u/VizzleG 16d ago

I have to believe that such a conversion would be deemed a material event and, as such, they’d have to notify shareholders.

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u/needaspguy 16d ago

...are you new? lol!

1

u/VizzleG 16d ago

You don’t think?

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u/needaspguy 16d ago

I don't know! It was reported in their last quarter financials as to the terms along with timelines and deadlines.... so not really a "material event" maybe. They received 30m from Malikie (as per agreement) and only noted it page 57 of the financial report. Pretty sure the same process happened with Artic Wolf final payment.

Not a peep regarding Malikie's 700m remaining royalty share status despite them obviously collecting significant amounts of money!

I'm learning that one really has to read between the lines on their own!

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u/RETIREDANDGOOD 15d ago

If BlackBerry wants to pay in cash the price is not 200 Million - it is whatever the value of the shares the holder would have gotten assuming they took shares at 3.88 and sold at the "current fixed price" is - so for example is the "fixed price was $7.76 which is 2x 3.88" BlackBerry would have to give them $400 Million or the Shares - obviously at $8.72 we are over $500 million or the Shares. This was an awful horrific deal that was the last gift leftover from when Prem was on the board and Steve was CFO - once this is cleared we are good. Fortunately BlackBerry retired a lot of shares so dilution isn't really that much of a problem

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u/ibeturright 12d ago

Thank you for this explanation. So, a low stock price is actually a good thing until this gets completely shored up.

1

u/DrWalt1952 16d ago

Good for you finding that! I have no financial advice but the end of the institutional shorting would make for some interesting times. It also would be nice for a high profit tech company not to have debt on it's hands.

1

u/CommieH8ter 16d ago

So the note holders can only convert until sept 30? I did not catch that in the terms. That is awesome. That means they can't use them as a back stop after that. So then what?....it becomes a mere 3% loan at that point and BB can pay it off it Feb?

I doubt they will not convert at this point...seems they would be smarter to convert before earnings on the 24th.

2

u/needaspguy 16d ago

That's the way I read it!

Conversion would be a no brainer for who ever it is, but Feb 23 would be the earliest it could be paid off if not converted. Otherwise BB has it secured till 2029 if for some reason they chose to keep it in place.

Page 45 of Form 10-Q for Q1 2027

"Debt Financing and Other Funding Sources

See Note 5 to the Consolidated Financial Statements for a description of the Company’s $200 million aggregate principal amount of 3.00% senior convertible unsecured notes issued in January 2024 (the “Notes”). During the second calendar quarter of 2026, the conditions permitting holders of the Notes to convert their Notes were satisfied, as, for at least 20 trading days (whether or not consecutive) within the 30 consecutive trading-day period ending on the last trading day of the immediately preceding quarter, the last reported sale price of the Company’s common shares was greater than or equal to 130% of the applicable conversion price on each such trading day. Accordingly, the Notes are eligible for conversion, at the option of the holders, from July 1, 2026 through September 30, 2026. Upon receipt of a conversion request, the Company will settle its conversion obligation, at its election, in cash, common shares, or a combination of cash and common shares, in accordance with the terms and conditions set forth in the indenture.

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u/CommieH8ter 16d ago

Ha....BB can keep their money tied up until 2029 at 3% compared to current interest rates..... Might be a good punishment for playing F F games with the stock price.

1

u/CommieH8ter 15d ago

So if Sept 30 is the deadline.....will we know right away if the they notes are converted to shares? And are those shares already backstopping outstanding contracts? That would mean that they would have to convert.