Bombardier completes sale of rail business to Alstom

Montreal-based Bombardier and Caisse de dépôt et placement du Québec have completed the sale of Bombardier's rail transportation business to France’s Alstom.

Montreal-based Bombardier and Caisse de dépôt et placement du Québec have completed the sale of Bombardier’s rail transportation business to France’s Alstom. Proceeds after the deduction of debt-like items and transferred liabilities are US$6 billion. After deducting CDPQ’s position and costs, the net proceeds to Bombardier are expected to be US$3.6 billion. CDPQ invested in Bombardier Transportation in 2016.

PRESS RELEASE

January 29, 2021

Bombardier (TSX: BBD.B) confirmed today the closing of the previously announced sale of its Transportation business to Alstom.

Total proceeds to the vendors after the deduction of debt-like items and transferred liabilities are $6.0 billion3. After deducting la Caisse de dépôt et placement du Québec equity position of $2.5 billion, transaction costs, and including the impact from closing adjustments and obligations related to achieving a minimum cash balance at Bombardier Transportation at the end of 2020, Bombardier expects net proceeds of approximately $3.6 billion. This amount includes $488 million of cash from the redemption of equity and a $125 million loan reimbursement by Transportation4, settled in conjunction with the transaction closing. Net proceeds also include approximately $600 million of Alstom shares (€500 million representing 11.5 million shares for a fixed subscription price of €43.465 per share), monetizable starting in late April 2021.

“With this transaction now complete, Bombardier begins an exciting new chapter focused exclusively on designing, building and servicing the world’s best business jets,” said Éric Martel, President and Chief Executive Officer, Bombardier Inc. “With an unmatched product portfolio, a world class customer services network and incredibly talented employees, we have a strong foundation to build upon as we use the proceeds from the transaction to begin addressing our balance sheet challenges through debt paydown.”

Proceeds from the transaction were lower than previous estimates as a result of Transportation’s lower than expected cash generation in the fourth quarter due in part to unfavorable market conditions, as well as disagreements between the parties as to certain adjustments which Bombardier intends to challenge.

Pro-forma net debt2 is approximately $4.7 billion, which includes long-term debt of $10.1 billion, net of $1.8 billion cash on hand at Bombardier Inc. (excluding Transportation) as of December 31, 2020, and the approximately $3.6 billion proceeds from the Transportation sale. The Company intends to deploy available proceeds from the sale of Transportation towards debt paydown and continues to evaluate the most efficient debt reduction strategies.

About Bombardier
Bombardier is a global leader in aviation, creating innovative and game-changing planes. Our products and services provide world-class experiences that set new standards in passenger comfort, energy efficiency, reliability and safety.

Headquartered in Montréal, Canada, Bombardier is present in more than 12 countries including its production/engineering sites and its customer support network. The Corporation supports a worldwide fleet of approximately 4,900 aircraft in service with a wide variety of multinational corporations, charter and fractional ownership providers, governments and private individuals.