Caisse open to upping its stake in Bombardier
MONTREAL• Caisse de Dépôt et Placement du Québec, Bombardier Inc.’s thirdlargest shareholder, would consider raising its stake in a show of confidence in Chief Executive Officer Alain Bellemare and his turnaround plan.
“Are we open to the idea of increasing our position? Yes,” Caisse CEO Michael Sabia told reporters Wednesday in Montreal. “It depends on the circumstances, it depends on the analysis that our teams make. Are we going to change something, increase our investment in Bombardier Inc. very soon? I don’t think so.”
Bombardier has been hemorrhaging cash after repeated development delays of its C Series jet, which is more than two years late, US$2 billion over budget and required a US$ 1 billion infusion from the Quebec government for a 49.5 per cent stake.
The company’s Class B shares have fallen about 50 per cent in the last year as investors have grown more concerned over its finances. The stock declined 9.23 per cent to $ 1.18 at close in Toronto Wednesday.
The Caisse held about 41.6 million Bombardier shares at the end of 2014, the most recent date for which figures are available. Earlier this month, the pension fund manager — Canada’s second biggest — completed a deal to acquire 30 per cent of Bombardier Transport, the company’s rail unit, for $ 1.5 billion.
“We’re already pretty constructive around the company in general,” Sabia said. “I guess that’s reflected in what we’ve done.”
Bellemare, hired a year ago with a mandate to restore profitability, is “doing virtually all of the right things,” Sabia said. Having revamped the leadership team and reached agreement on $ 2.5 billion of financing in late 2015, the Bombardier CEO unveiled plans last week to cut 7,000 jobs over two years and bolster cash flow.
“Alain Bellemare is doing a very good job,” Sabia said. “We take our hat off to him because it’s not an easy job. Alain has been there about a year, and in the history of a turnaround, those are early days.”
As Bombardier continues talks with Canada’s federal government over an investment in the C Series program, Sabia said shareholders would benefit from a deal that lowers the danger associated with the aircraft.
Bombardier “is a risk reduction story,” Sabia said. “That’s why the participation of governments directly in the C Series is actually a constructive thing.”
Sabia spoke after t he Caisse reported a 9.1 per cent return in 2015, pushing net assets to $248 billion at yearend.
The province’s largest pension fund manager says it gained $20.1 billion from net investments and $2.1 billion in net deposits for the year.