Caisse open to up­ping its stake in Bom­bardier

National Post (Latest Edition) - - FINANCIAL POST - Fred­eric Tomesco

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.

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