Family control of Bombardier poses hurdle to aid: sources
Corporate governance rules are a matter of concern to Ottawa
The federal government is pushing for changes in the dual- class share structure of embattled aircraft manufacturer Bombardier Inc. in exchange for possible financial aid, officials familiar with the plans said.
Prime Minister Justin Trudeau’s Liberal government, which is reviewing a request by Bombardier to help fund the development of its C Series jet, is concerned about the company’s corporate governance rules through which the Bombardier family controls the business, three people familiar with the file said, speaking on condition they not be identified because discussions are ongoing.
If the federal government imposes a governance condition, it may force Bombardier into a tough choice: loosen family control of the business or give up federal funding. The 73- year- old Bombardier has been reduced to a penny stock as investors lose confidence in a company that’s two years behind schedule and about $ 2 billion over budget in the development of its C Series jet. The Trudeau government, meanwhile, faces its own risk that changes in governance could leave Bombardier vulnerable to a takeover.
Economic Development Minister Navdeep Bains, asked on Feb. 2 whether he was pressing for changes to the share structure, would say only the government continues to review its options. “We just want to do a thorough job of looking at the business case,” said Bains, Trudeau’s point- man on the Bombardier file. Kelly Acton, a spokeswoman for Bains, declined to comment Friday.
Members of the Bombardier f amily of Quebec control the manufacturer through its dualclass share structure by holding more than 50 per cent of the voting rights i n the company, despite only owning a minority equity stake. Isabelle Rondeau, a Bombardier spokeswoman in Montreal, declined to comment Friday on the talks with the federal government.
The company has been tinkering with its governance. Pension fund manager Caisse de dépôt et placement du Québec, in exchange for its $ 1.5 billion investment in Bombardier’s rail division last year, won some concessions including a say in the appointment of independent directors.