Bombardier Will Sell Assets To Raise Cash

By Agence France-Presse Canadian aeronautics and engineering giant Bombardier Inc. unveiled plans April 3 to sell off assets and issue new stock to shore up its finances and cope with the global economic slowdown. The Montreal-based company said it aims to raise C$2.3 billion (US$1.5 billion) in a share issue and from divestments as part of a restructuring program. The firm, which has been hit by the slump in civil aviation and other sectors, made the announcement as it disclosed a fiscal 2003 loss of $615.2 on revenues of $23.7 billion. One big move will be to shed its profitable recreational products division, which produces snowmobiles and jet water skis. The company also will refocus the efforts of its Bombardier Capital finance arm to concentrate on aircraft leasing, getting out of financing for rail cars and other activities. "We will rebuild our credibility with investors with the action plan we are announcing today," said President and CEO Paul Tellier. "The sale of our recreational products business provides a good balance between our asset divestitures and the equity offering." Bombardier said it expects to raise $800 million in an offering of Class B shares for which it will file a short-form prospectus, as well as more than $1.5 billion from planned divestitures, including Bombardier Recreational. Bombardier has faced a major slowdown in purchases of its regional jet range of aircraft and, with the Iraq war continuing at a slower pace than many had believed, cancellations of existing orders are being anticipated. But Tellier said there is evidence that regional jet sales orders are likely to go up. "If you look at the restructuring plan of the major airlines . . . each one of them as a cornerstone of their restructuring plan has an increase in the use of regional jets." The recreational division is the unit that launched Bombardier, and Bombardier family members have expressed an interest in participating in the divestiture process as part of an eventual group of investors seeking to acquire the recreational products business. In view of the family's interest, the board has formed a committee of independent directors to supervise and monitor the divestiture process, evaluate offers or other alternatives, and make recommendations to the board. Copyright Agence France-Presse, 2003