10-10-2015, 12:30 PM
Bombardier has an estimated $3B in cash available. It burnt through $1.6B in the first half of its current fiscal year. Bombardier may be bankrupt this time next year.
The last rounds of bonds and share issuance went horribly, the Caisse (normally a bid pro-Quebec booster) made a token investment. Even the Caisse questions the mixed share structure that allows the Beaudoin family to control voting despite only having 14% of the equity.
One option would be to sell all/part of its rail division. Beijing Infrastructure Investment Co., a Chinese government-owned investment firm, offered to acquire 60-100% of Bombardier's Transportation segment. Bombardier reportedly rejected the offer one week later, indicating that the Company would not consider the sale of a majority stake at this time. Analysts believed that Bombardier did not agree on the price of the sale, noting that the management’s contention is that the division is worth more that the offered price. Bombardier will soon find out that when you're burning cash at that rate, beggars can't be choosers.
Bombardier tried to get Airbus to take over the C Series, unsuccessfully. Basically, Bombardier was asking a competitor to take obver a project that is 90% complete and take the majority of its revenue. It's that desperate.
The C Series uses cutting edge material and systems technology to reduce fuel usage. Unfortunately, fuel is a lot cheaper now. The incentive for airlines to make that capital investment is a lot lower.
Airbus and Boeing can discount their competing regional jets and take a loss, just to eliminate Bombardier. They're giants and Bombardier is a midget (by comparison) with $9B in debt.
All this smells bad, I forsee an expensive government bailout.
The last rounds of bonds and share issuance went horribly, the Caisse (normally a bid pro-Quebec booster) made a token investment. Even the Caisse questions the mixed share structure that allows the Beaudoin family to control voting despite only having 14% of the equity.
One option would be to sell all/part of its rail division. Beijing Infrastructure Investment Co., a Chinese government-owned investment firm, offered to acquire 60-100% of Bombardier's Transportation segment. Bombardier reportedly rejected the offer one week later, indicating that the Company would not consider the sale of a majority stake at this time. Analysts believed that Bombardier did not agree on the price of the sale, noting that the management’s contention is that the division is worth more that the offered price. Bombardier will soon find out that when you're burning cash at that rate, beggars can't be choosers.
Bombardier tried to get Airbus to take over the C Series, unsuccessfully. Basically, Bombardier was asking a competitor to take obver a project that is 90% complete and take the majority of its revenue. It's that desperate.
The C Series uses cutting edge material and systems technology to reduce fuel usage. Unfortunately, fuel is a lot cheaper now. The incentive for airlines to make that capital investment is a lot lower.
Airbus and Boeing can discount their competing regional jets and take a loss, just to eliminate Bombardier. They're giants and Bombardier is a midget (by comparison) with $9B in debt.
All this smells bad, I forsee an expensive government bailout.