FAIRFAX STILL ON BOARD

In BlackBerry's new debt deal, the seven-year subordinated debentures will be convertible into common shares at $10 each. The private placement could eventually increase the number of BlackBerry shares by almost 20 percent.

BlackBerry did not name the other investors in the deal, but Watsa said Silver Lake is not one of them.

Since BlackBerry thus far carries no debt, analysts noted that the financing deal puts Fairfax in a strong position even if the turnaround plan fails and BlackBerry is forced to seek creditor protection. Debt holders take precedence over equity investors in such cases, giving Fairfax a bigger say in the company's ultimate fate.

"We did the due diligence ... and our conclusion was that a leveraged buyout with high-yield debt and at high interest rates was not appropriate for this company," Watsa said in an interview on Monday. "So we came out with the convertible debenture deal that we saw as more appropriate."

The investors have an option to buy up to an additional $250 million worth of debentures within 30 days after closing.

Despite the new financing deal challenges remain, including a declining subscriber base, falling shipments, the defection of clients that use its enterprise servers and a loss of market share, analysts say.

"Investors should expect very poor operating results in the coming quarters," warned National Bank analyst Kris Thompson, who slashed his BlackBerry price target to $3 from $9.