- Net proceeds to Bombardier of ~$3.6 billion, including ~$600 million in Alstom shares
- Proceeds strengthen liquidity and will allow the Company to begin debt paydown1; Pro-forma net debt as of December 31, 2020 ~$4.7 billion2
- Completes Bombardier’s repositioning as a pure-play business jet company
All amounts in this press release are in U.S. dollars unless otherwise indicated. Amounts in EUR in this press release are converted to USD at an exchange rate of 1.22, except for certain transaction cash proceeds fixed at an exchange rate of 1.17.
Bombardier (TSX: BBD.B) confirmed today the closing of the previously announced sale of its Transportation business to Alstom.
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.
Bombardier is a global leader in aviation, creating innovative and game-changing planes. Our products and services provide world-class experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.
Headquartered in Montréal, Canada, Bombardier is present in more than 12 countries including its production/engineering sites and its customer support network. The Corporation supports a worldwide fleet of approximately 4,900 aircraft in service with a wide variety of multinational corporations, charter and fractional ownership providers, governments and private individuals.
Bombardier is a trademark of Bombardier Inc. and its subsidiaries.
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1. See the forward-looking statements disclaimer at the end of this press release.
2. Non-GAAP financial measure. Pro-forma net debt is defined as Long-term debt of $10.1 billion less cash and cash equivalents at Bombardier Inc. (excluding Transportation) of $1.8 billion as of December 31, 2020 less net proceeds of approximately $3.6 billion from the sale of Bombardier Transportation, which includes approximately $600 million of Alstom shares. Non-GAAP financial measures are mainly derived from the consolidated financial statements but do not have standardized meanings prescribed by IFRS. The exclusion of certain items from non-GAAP performance measures does not imply that these items are necessarily non-recurring. Other entities in our industry may define the above measures differently than we do. In those cases, it may be difficult to compare the performance of those entities to ours based on these similarly-named non-GAAP measures.
3. Includes the amount paid by Alstom to redeem Bombardier and CDPQ’s capital injections of €400 million ($488 million) and €350 million ($427 million), respectively, in BT Holdco made in 2020 to support working capital.
4. Represents the redemption by Alstom of Bombardier’s share of the capital injection made in BT Holdco in 2020 amounting to €400 million ($488 million) and the pre-closing reimbursement by BT Holdco of the intercompany subordinated loan of €103 million ($125 million) made by Bombardier in 2019.
5. Because shares were issued by Alstom following the execution of the SPA, Bombardier’s share subscription price was adjusted from €47.50 per share to €43.46 per share in accordance with the previously agreed upon anti-dilution adjustment mechanism.
This press release includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, anticipations and outlook or guidance in respect of various financial and global metrics and sources of contribution thereto, targets, goals, priorities, market and strategies, financial position, market position, capabilities, competitive strengths, credit ratings, beliefs, prospects, plans, expectations, anticipations, estimates and intentions; general economic and business outlook, prospects and trends of an industry; expected demand for products and services; growth strategy; 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; expectations regarding revenue and backlog mix; the expected impact of the legislative and regulatory environment and legal proceedings; strength of capital profile and balance sheet, creditworthiness, available liquidities and capital resources and expected financial requirements; productivity enhancements, operational efficiencies and restructuring initiatives; expectations and objectives regarding debt repayments and refinancing of bank facilities and maturities; expectations regarding availability of government assistance programs, compliance with restrictive debt covenants; expectations regarding the declaration and payment of dividends on our preferred shares; intentions and objectives for our programs, assets and operations; and the impact of the COVID-19 pandemic on the foregoing and the effectiveness of plans and measures we have implemented in response thereto. As it relates to the transaction discussed herein, this press release contains forward-looking statements with respect to the use of the proceeds from the sale of the Transportation business, the evaluation of debt reduction strategies and our intentions with respect to challenging the determination of proceeds.
Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “shall”, “can”, “expect”, “estimate”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negative of these terms, variations of them or similar terminology. Forward-looking statements are presented for the purpose of assisting investors and others in understanding certain key elements of our current objectives, strategic priorities, expectations, outlook and plans, and in obtaining a better understanding of our business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
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 our actual results in future periods to differ materially from forecast results set forth in forward-looking statements. While management considers these assumptions to be reasonable and appropriate based on information currently available, there is risk that they may not be accurate. The assumptions underlying the forward-looking statements made in this press release in relation to the transaction discussed herein include the following material assumptions: the realization of the intended benefits therefrom (including intended use of proceeds) within the anticipated timeframe; our ability to retain key management and employees following completion of the transaction; our ability to satisfy our liabilities and meet our financial covenants and debt service obligations following completion of the transaction; our ability to access the capital markets as needed following completion of the transaction; and fulfillment by the other parties of their respective obligations, commitments and undertakings pursuant to transaction documentation. For additional information, including with respect to the other assumptions underlying the forward-looking statements made in this press release, refer to the assumptions below the Forward-looking statements in the MD&A of our financial report for the three-and nine-month periods ended September 30, 2020 and the Strategic Priorities and Guidance and forward-looking statements sections in the applicable reportable segment in the MD&A of our financial report for the fiscal year ended December 31, 2019. Given the impact of the changing circumstances surrounding the COVID-19 pandemic and the related response from Bombardier, governments (federal, provincial and municipal), regulatory authorities, businesses and customers, there is inherently more uncertainty associated with our assumptions as compared to prior periods.
With respect to the transaction discussed herein specifically, certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include, but are not limited to: uncertainty regarding all or part of the intended benefits therefrom not being realized, or it is determined, necessary or required to direct all or part of the anticipated proceeds therefrom towards other uses than those identified in this press release the failure by the parties to fulfill their obligations, commitments and undertakings pursuant to transaction documentation; Bombardier being unable to satisfy its liabilities and meet its financial covenants and debt service obligations following completion of the transaction; the failure to retain our key management, personnel and clients following completion of the transaction and risks associated with the loss and replacement of key management and personnel; and the impact of the announcement of the transaction on our relationships with third parties, including potentially resulting in the loss of clients, employees, suppliers, business partners or other benefits and goodwill of the business.
Readers are cautioned that the foregoing list of factors that may affect the transaction discussed herein, future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. For more details, see the Risks and uncertainties sections in Other in the MD&A for the three- and nine- month period ended September 30, 2020 and in the MD&A of our financial report for the fiscal year ended December 31, 2019. Other risks and uncertainties not presently known to us or that we presently believe are not material could also cause actual results or events to differ materially from those expressed or implied in our 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, we expressly disclaim any intention, and assume 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.