- Assets, liabilities and obligations of C Series program to be transferred to the newly created limited partnership.
- Bombardier will hold 50.5% equity stake in the partnership; Investissement Québec will hold 49.5%.
- $1B US investment to be disbursed in two $500M US installments, on June 30, 2016 and on September 1, 2016.
- C Series Aircraft Limited Partnership headquarters, assembly, manufacturing, engineering services and R&D activities to remain in Québec for at least 20 years.
Bombardier is pleased to confirm that it has entered into a definitive agreement for the previously announced $1 billion US investment by the Government of Québec in a newly created limited partnership, the C Series Aircraft Limited Partnership (the “CSALP”), to which the assets, liabilities and obligations of the C Series aircraft program will be transferred.
“We are delighted to officially welcome the Government of Québec as an equity partner in the C Series program,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc. “We are grateful for the confidence the people and Government of Québec have in the C Series. Their investment will accelerate the momentum we’ve created, strengthen customer confidence in the aircraft and provide Bombardier with the financial flexibility needed to compete and win.”
The disbursement of the investment is expected to occur in two $500 million US payments, on June 30, 2016 and on September 1, 2016. Upon completion of the investment, the CSALP will be 50.5%-owned by Bombardier and 49.5%-owned by the Government of Québec, through its mandatary, Investissement Québec.
Bombardier will maintain operational control of the C Series program and consolidate its financial results. Fred Cromer will serve as President of the CSALP, and continue in his current role.
The Board of Directors of CSALP will consist of five directors, three of whom will be proposed by Bombardier and two by the Government of Québec. Daniel Johnson will serve as chairman of the Board of Directors of the CSALP.
As previously reported, the investment has been approved by Bombardier’s Board of Directors and the Cabinet of the Government of Québec and remains conditional upon the satisfaction of other customary conditions. The $1 billion US investment will be used entirely for cash flow purposes of the CSALP.
As part of the agreement, the strategic, financial and operational headquarters for the CSALP, along with the assembly, manufacturing, engineering services and research and development activities of the CSALP, will remain in the Province of Québec for at least 20 years.
Issuance of warrants
As announced on October 29, 2015, the investment includes the issuance of warrants in the name of Investissement Québec, exercisable to acquire Class B Shares (subordinate voting) in the capital of Bombardier (the Class B Shares).
It was agreed that these warrants will be exercisable by the Government of Québec to acquire up to 100,000,000 Class B Shares (representing approximately 4.26% of the aggregate issued and outstanding Class A Shares (multiple voting) in the capital of Bombardier (the Class A Shares) and Class B Shares, assuming the exercise of the warrants, and approximately 4.45% of the aggregate issued and outstanding Class A Shares and Class B Shares on a non-diluted basis), at an exercise price per share equal to $1.72 US, being an amount equivalent of $2.21 Cdn on the date of execution of the final agreement, which represents a premium to the 5-day volume-weighted average price (VWAP) of the Class B Shares on the TSX as of the date hereof and as of October 20, 2015.
The warrants will contain market standard adjustment provisions, including in the event of corporate changes, stock splits (directly or indirectly through a share dividend), distributions of rights, options or warrants to all or substantially all shareholders or consolidations, as well as adjustment provisions applicable in the event of extraordinary dividends and distributions of shares, debt securities, property and other assets to all or substantially all shareholders.
Bombardier is the world’s leading manufacturer of both planes and trains. Looking far ahead while delivering today, Bombardier is evolving mobility worldwide by answering the call for more efficient, sustainable and enjoyable transportation everywhere. Our vehicles, services and, most of all, our employees are what make us a global leader in transportation.
Bombardier is headquartered in Montréal, Canada. Our shares are traded on the Toronto Stock Exchange (BBD) and we are listed on the Dow Jones Sustainability North America Index. In the fiscal year ended December 31, 2015, we posted revenues of $18.2 billion US. News and information are available at bombardier.com or follow us on Twitter @Bombardier.
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This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to the Corporation’s objectives, guidance, targets, goals, priorities, market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; product development, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services, orders, deliveries, testing, lead times, certifications and project execution in general; competitive position; the expected impact of the legislative and regulatory environment and legal proceedings on the Corporation’s business and operations; available liquidities and ongoing review of strategic and financial alternatives; the completion, anticipated timing and use of the C Series Investment; the effects of the C Series Investment and of the private placement of a minority stake in Transportation to the Caisse de dépôt et placement du Québec (the CDPQ Investment and, with the C Series Investment, the Investments) on the range of options available to us, including regarding our participation in future industry consolidation; the capital and governance structure of the Transportation segment following the CDPQ Investment, and of the Commercial Aircraft segment following the C Series Investment; the impact and expected benefits of the Investments on our operations, infrastructure, opportunities, financial condition, access to capital and overall strategy; and the impact of the sale of equity on our balance sheet and liquidity position; the completion of a pre-closing internal restructuring and the receipt of regulatory and other approvals required with respect to the C Series Investment and the anticipated timing thereof.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require management to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecast results. While management considers their assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate.
Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industry, of business aircraft customers, and of the rail industry; trade policy; increased competition; political instability and force majeure), operational risks (such as risks related to developing new products and services; development of new business; the certification and homologation of products and services; fixed-price commitments and production and project execution; pressures on cash flows based on project-cycle fluctuations and seasonality; our ability to successfully implement our strategy and transformation plan; doing business with partners; product performance warranty and casualty claim losses; regulatory and legal proceedings; the environment; dependence on certain customers and suppliers; human resources; reliance on information systems; reliance on and protection of intellectual property rights; and adequacy of insurance coverage), financing risks (such as risks related to liquidity and access to capital markets; retirement benefit plan risk; exposure to credit risk; existing debt and interest payment requirements; certain restrictive debt covenants; financing support provided for the benefit of certain customers; and reliance on government support), market risks (such as risks related to foreign currency fluctuations; changing interest rates; decreases in residual values; increases in commodity prices; and inflation rate fluctuations); the conditions to the completion of the C Series Investment not being satisfied, the pre-closing internal restructuring not being completed, or failure to receive the approvals required with respect to the C Series Investment, particularly regulatory approvals, and changes in the C Series Investment. For more details, see the Risks and uncertainties section in Other in the Management’s Discussion and Analysis (MD&A) of the Corporation’s financial report for the fiscal year ended December 31, 2015. Certain important assumptions by management in making forward-looking statements include, but are not limited to: the satisfaction of all conditions to the completion of the C Series Investment, including the completion of the pre-closing internal restructuring and the receipt of any required regulatory and other approvals. For additional information with respect to the assumptions underlying the forward-looking statements made in this press release, refer to the Guidance and forward-looking statements sections in the MD&A of the Corporation’s financial report for the fiscal year ended December 31, 2015. There can be no assurance that the C Series Investment will be completed in whole or in part, or of the timing of any such transaction.
Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect management’s expectations as at the date of this press release and are subject to change after such date. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.