11/04/2013 08:42 EST

BlackBerry CEO Thorsten Heins Out As Fairfax Deal Dies: Report

Fairfax Financial's bid to buy BlackBerry has failed, the struggling smartphone maker has given up the search for a buyer and its CEO will resign, the company announced Monday morning.

It is the second time in two years the company has replaced its chief executives.

Shares closed Monday down nearly 17 per cent at $6.75, much lower than the $9 U.S. per share Fairfax had offered in its failed bid. Monday marked the deadline for it to review BlackBerry's books. Still, BlackBerry’s chair of the board called the news a “significant vote of confidence in BlackBerry.”

Instead of taking the company private as planned, Fairfax Financial said the group of institutional investors it leads will invest $1 billion U.S. in the company through a private placement of bonds.

“Today's announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors," said board chair Barbara Stymiest.

“This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position. Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs."

Fairfax Financial, run by billionaire Prem Watsa, offered $4.7 billion for BlackBerry in September, but according to multiple news reports, struggled to raise the financing for the bid. No other bidder stepped forward during the sale process.

Changes to the management and board, including the ouster of Heins and David Kerr, a director of the board, will happen once the deal closes.

John Chen, formerly the CEO of Sybase Inc.,will be appointed executive chair of BlackBerry’s board and interim CEO.

The company will then begin the search for a new permanent CEO.

Barbara Stymiest said the decisions announced Monday were the result of a strategic review that began in August after the board determined this course of action would be in the best interest of the company and its shareholders.

Fairfax already owns 9.9 per cent of BlackBerry. Watsa has been appointed lead director of the board. He had previously stepped down from the board earlier this year as his company contemplated its purchase of the Waterloo, Ont.-based company.

Fairfax's bid for the company came shortly after BlackBerry announced a massive $965-million loss for the second quarter, and job cuts amounting to 40 per cent of its workforce.

Heins' short run as CEO of BlackBerry began in January, 2012, when co-founder Jim Balsillie and Mike Lazaridis stepped down as co-CEOs, following another negative earnings report.

Heins said at the time of his appointment he intended to bring BlackBerry back as one of the top three smartphone players in the world. But since then, the company has seen its market share continue to slide and its BlackBerry 10 line of phones, released earlier this year, appears to have failed to stem the company's bleeding.

Stymiest praised his accomplishments as CEO, including the delivery of the BB10 platform.

“We are grateful for his contributions and wish him well in his future endeavors."

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