BlackBerry sells patents linked to legacy smartphone business for US$600-million – The Globe and Mail

Ottawa will review the US$600-million sale of BlackBerry Ltd.’s BB-T legacy smartphone patents to a Delaware-registered company, dragging out the death of the pioneering handset years after the company recast itself as a cybersecurity business with an interest in connected cars.

Industry Minister François-Philippe Champagne said Monday that the federal government will scrutinize the deal through the Investment Canada Act, which it routinely does with such acquisitions “to ensure they are likely to have a net benefit to the Canadian economy, and do not pose a risk to our national security.” Last March, his department updated the Act to include reviews on transactions that might involve “potentially sensitive technologies.”

The sale, which has been in the works since 2020, was also announced Monday. Buyer Catapult IP Innovations Inc., which was formed was formed specifically to buy the assets, was created last June, and its registration documents do not list any directors or shareholders.

Catapult is paying for the deal with a US$450-million senior secured loan and a promissory note for the balance, secured by a second lien on the patents payable in five installments starting three years after the closing date.

The debt financing is being led by Toronto’s Third Eye Capital and Catapult has secured US$400-million of conditional commitments from a syndicate that includes an unnamed Canadian pension fund, BlackBerry said in a regulatory filing with the U.S. Securities and Exchange Commission. The filing added that Catapult will also need to complete a US$90-million equity financing in order to access the loan and complete the transaction.

Third Eye did not return a request for comment Monday.

The company once known as Research in Motion Ltd. has spent the last decade, much of it under the guidance of chief executive John Chen, building on the strength of the secure messaging its BlackBerry handsets were once known for. Securing data transmission, particularly for enterprise customers, is now one of the company’s core business lines – as is connected-car technology, which itself requires increasing data security with each passing year as automakers continue to refine technology for self-driving cars.

The company said the transaction would not impact its customers’ use of any of the company’s current products, solutions or services in areas such as technology to power connected cars or cybersecurity, and that it had obtained a license to the patents being sold. The transaction is expected to take up to seven months to complete.

BlackBerry earlier this month further distanced itself from its legacy as a smartphone pioneer by shutting off software support for its legacy BB7 and BB10 devices, which it hasn’t made for years. (Some overseas manufacturers have licenced the brand for phones that typically run Google’s Android operating system.)

The company has struggled to reignite its share price under the leadership of Mr. Chen, and last year became one of a handful of so-called “meme stocks” to temporarily spike up in value.

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