Exclusive - Bombardier turns to Caisse for cash: sources

Fri Oct 2, 2015 6:38pm EDT
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By Allison Lampert and Andrea Shalal

MONTREAL/WASHINGTON (Reuters) - Bombardier Inc (BBDb.TO: Quote) is in discussions with the Caisse de depot et placement du Quebec, which manages Quebec's public pension plans, on a deal that could inject more cash into the troubled plane and train maker, according to two sources familiar with the matter.

It was not immediately clear how a potential deal would be structured. One source familiar with the company's thinking said the Caisse, already one of Bombardier's biggest shareholders, was contemplating taking a larger stake in the Montreal-based company.

"It's not a done deal yet," said a source from Canada’s second-largest pension fund.

If it closes a deal with the Caisse, it will be the second surprise financing in less than a year, a humbling turn for one of Quebec's best-known companies.

In February, Bombardier raised C$1.1 billion in equity and $2.25 billion in debt. At that time, the Caisse bought C$13.3 million worth of Bombardier stock, the Globe and Mail reported in June.

The root of Bombardier's problems is the CSeries, a new medium-range, narrow-body jet that is set to enter service next year, years late and billions over budget. To support it, sources have told Reuters, Bombardier is willing to consider selling stakes in all its business units, not just rail.

A deal with the Caisse could shore up Bombardier's balance sheet relatively quickly, with minimal political fallout or impact on cash flow. By contrast, selling a major asset to a foreign buyer would likely kick off a lengthy government review, and sap it of badly-needed cash flow. A direct government bailout may prove unpopular ahead of an Oct. 19 federal election.

But there is no guarantee Bombardier will close a deal with the Caisse, and the process has been difficult, coming so soon after February's multi-billion dollar debt and equity financing, said one source at the Caisse.   Continued...

A Bombardier CS300 participates in a flying display during the 51st Paris Air Show at Le Bourget airport near Paris, June 16, 2015. REUTERS/Pascal Rossignol