BlackBerry (BBRY): Debt Redemption Has Slight Positive EPS Impact - Wells Fargo

August 30, 2016 9:33 AM EDT
Get Alerts BBRY Hot Sheet
Price: $7.26 -0.14%

Rating Summary:
    7 Buy, 39 Hold, 16 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 17 | Down: 27 | New: 7
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Wells Fargo analyst, Maynard Um, maintained his Market Perform rating on shares of BlackBerry (NASDAQ: BBRY) after the company announced that it plans to redeem its entire 6% convertible debt of $1.245B by September 2. BBRY is to redeem the debt at 106.7213%. BBRY announced that it will issue $605MM of unsecured convertible debt at 3.75% due November 13, 2020 by September 2, 2016. The 3.75% debt is identical to the 6% debt except the 3.75% debt is not redeemable prior to its maturity. The new debt can be convertible at $10/share and upon conversion would be 11.57% of common shares.

Relative to the analyst's expectations, BBRY will be redeeming its debt roughly two months earlier (than its call date of November 13, 2016) albeit at a 2.7% higher premium (the analyst had expected a 4% premium). The net result to F17 EPS is an increase of 2c [Street: ($0.17)] as the higher premium and new debt is offset by the earlier redemption.

No change to the valuation range of price target of $7.25 - $8.00.

For an analyst ratings summary and ratings history on BlackBerry click here. For more ratings news on BlackBerry click here.

Shares of BlackBerry closed at $7.92 yesterday.

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