Quebec’s provincial pension fund agreed to buy a 30 percent stake in Bombardier Inc.’s rail business for $1.5 billion, with the Canadian manufacturer shelving a public stock sale in the unit following a strategic review.
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Caisse de Depot & Placement du Quebec will acquire convertible shares in a new holding company that the Montreal-based train and plane producer is creating out of its Bombardier Transportation division, the companies said in a statement Thursday.
The deal values Bombardier Transportation at $5-billion, the company said.
BT Holdco will own all…
“The transaction announced today, when completed, will crystallize the value of Bombardier Transportation and strengthen Bombardier’s financial position, with no increase in debt”, it said. It will be governed by a new board composed of seven members, three named by CDPQ.
The Canadian government is examining a request for assistance from struggling aircraft maker Bombardier, Innovation Minister Navdeep Bains said, adding that one consideration was whether such aid would be too risky.
If Bombardier Transportation outperforms its business plan, CDPQ’s percentage of ownership on conversion of its shares decreases by 2.5% annually, down to a minimum threshold of 25%.
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However, if Bombardier Transportation underperforms the Caisse’s stake on conversion of its shares will increase by 2.5 per cent per year, up to a maximum of 42.5 per cent. The convertible shares’ minimum return would increase up to 12 per cent under those circumstances. In the event it falls below that level, a Special Initiatives Committee would be appointed to develop a plan to restore it.
