Bombardier expects net proceeds of about $3.6bn from the sale, after deducting local tax (la Caisse de dépôt et placement du Québec) equity position of $2.5bn, transaction costs and including obligations relating to the achieving a minimum cash balance of at Bombardier Transportation at the end of 2020.
The company’s net proceeds include $488m of cash from the redemption of equity and a $125m loan reimbursement by Transportation, settled in conjunction with the closing. Net proceeds also include approximately $600m of Alstom shares, monetisable from late April 2021.
Éric Martel, President and CEO, Bombardier Inc said:“With this transaction now complete, Bombardier begins an exciting new chapter focused exclusively on designing, building and servicing the world’s best business jets.
“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 due to lower than forecast cash generation in the last quarter. Bombardier put this down to, in part unfavourable market conditions, as well as disagreements between the parties on certain adjustments, which Bombardier said it will challenge. Last October after shareholder approval the sale was estimated at $4bn.
Pro-forma net debt is approximately $4.7bn, which includes long-term debt of $10.1bn, net of $1.8bn cash on hand at Bombardier as of December 31st, 2020, and the about $3.6bn proceeds from the transportation sale.
Meanwhile, Bombardier revealed last February it had made the strategic decision to focus exclusively on business aviation and planned to accelerate its deleveraging through the sale of its rail business.
Speaking at the time, Alain Bellemare, then President and CEO, Bombardier Inc said: “Today [February 17th], 2020 marks an exciting new chapter for Bombardier. Going forward, we will focus all our capital, energy and resources on accelerating growth and driving margin expansion in our market-leading $7bn business aircraft franchise. With a stronger balance sheet after the completion of this transaction, an industry-leading portfolio of products, a strong backlog, and a rapidly growing aftermarket business, we will compete in this market from a position of strength.”
Net proceeds to Bombardier of about $3.6bn, including about $600m in Alstom shares
Proceeds strengthen liquidity and will allow the company to begin debt paydown; Pro-forma net debt as of December 31st, 2020 was about $4.7bn
This completes Bombardier’s repositioning as a pure-play business jet company.