TORONTO, Feb 20 (Reuters) - Bombardier Inc said on Friday it is boosting the size of its planned equity offering, in an indication that the market is ready to bet on a turnaround in the fortunes of the troubled plane and train maker.
Montreal-based Bombardier said it is increasing its offering to C$938 million ($749 million) from the planned offering of C$750 million it outlined on Thursday. If the syndicate of banks underwriting the offering opts to tap the over-allotment option, proceeds could jump to C$1.08 billion.
"It's encouraging news and shows good demand at that price level," said Colin Cieszynski, chief market strategist at CMC Markets. "Too much demand is certainly better than not enough demand."
Shares in Bombardier hit a six-year low of C$2.30 on Friday, but the stock held firmly above the syndicate's buy-in price on the offering of C$2.21 a share. The offering was priced at a nearly 10 percent discount to the C$2.45 closing price for Bombardier's Class B shares on the Toronto Stock Exchange on Thursday.
Bombardier's shares were down 2.4 percent at C$2.39 in afternoon trading.
The large discount that Bombardier agreed to underscores the challenges facing the company, which stunned investors last week when it replaced its chief executive, suspended its dividends and said it planned to raise $2 billion in new debt and equity, due to further cost overruns in its CSeries jet program.
Thomson Reuters trading data indicates that a large portion of the buy-in orders on the stock on Friday were being driven by the brokerage arm of National Bank of Canada, which is a lead underwriter on the offering.
UBS Securities Canada, CIBC and Citigroup Global Markets Canada Inc are the other lead underwriters on the bought deal. A bought deal occurs when an underwriter, or a syndicate, buys shares from an issuer at a set price before selling them to the public.
Separately on Friday, Bombardier said it has won regulatory approval to begin flight testing the CS300, the larger version of its new CSeries narrow-body jet. The first flight is expected between Feb. 26 and 28.
Flight testing on the smaller CS100 began in September 2013 but was stalled for months last year after an engine failure during a ground trial in May. The CSeries program has been plagued by delays for years.
$1 = 1.2526 Canadian dollars Reporting by Euan Rocha and John Tilak; Editing by Leslie Adler