MONTREAL – BERLIN – Bombardier has confirmed today the closing of the previously announced sale of its Transportation business to Alstom.
This means that the Bombardier plant here in Thunder Bay is now under new ownership.
The Thunder Bay manufacturing facility has a very interesting past. During World War Two the plant made Hawker Hurricanes, the durable fighter aircraft that helped win the Battle of Britain.
Then it was the manufacturer of forestry equipment making the Tree Farmer, a logging skidded. The move to rail car manufacturing set up a long history with the City of Toronto making street cars and light rail transit vehicles.
Recently the plant was manufacturing ventilators to assist during the COVID-19 pandemic.
Right now there is hope on the horizon for the local plant, with some work from the TTC possible. Unifor, the union representing the workers, along with civic officials and the Mayor of Thunder Bay have been working to ensure the facility, one of the largest private sector employers in the city survives.
Bombardier Shifts to Aviation
Total proceeds to the vendors after the deduction of debt-like items and transferred liabilities are $6.0 billion3. After deducting la Caisse de dépôt et placement du Québec equity position of $2.5 billion, transaction costs, and including the impact from closing adjustments and obligations related to achieving a minimum cash balance at Bombardier Transportation at the end of 2020, Bombardier expects net proceeds of approximately $3.6 billion. This amount includes $488 million of cash from the redemption of equity and a $125 million loan reimbursement by Transportation4, settled in conjunction with the transaction closing. Net proceeds also include approximately $600 million of Alstom shares (€500 million representing 11.5 million shares for a fixed subscription price of €43.465 per share), monetizable starting in late April 2021.
“With this transaction now complete, Bombardier begins an exciting new chapter focused exclusively on designing, building and servicing the world’s best business jets,” said Éric Martel, President and Chief Executive Officer, Bombardier Inc. “With an unmatched product portfolio, a world class customer services network and incredibly talented employees, we have a strong foundation to build upon as we use the proceeds from the transaction to begin addressing our balance sheet challenges through debt paydown.”
Proceeds from the transaction were lower than previous estimates as a result of Transportation’s lower than expected cash generation in the fourth quarter due in part to unfavorable market conditions, as well as disagreements between the parties as to certain adjustments which Bombardier intends to challenge.
Pro-forma net debt2 is approximately $4.7 billion, which includes long-term debt of $10.1 billion, net of $1.8 billion cash on hand at Bombardier Inc. (excluding Transportation) as of December 31, 2020, and the approximately $3.6 billion proceeds from the Transportation sale. The Company intends to deploy available proceeds from the sale of Transportation towards debt paydown and continues to evaluate the most efficient debt reduction strategies.
