TORONTO: Bombardier Incorporation, a Canadian multinational aerospace and transportation company, will sell $750 million worth of shares at a 10% discount to its beaten down stock price.
The Montreal based company released the details of its bought deal equity financing, a week after announcing a plan to raise US$2.1 billion in new capital.
Bombardier’s shares are down more than 40% since the beginning of the year due to a litany of problems, including weaker than expected financial results, further cost overruns in the CSeries program, a suspended dividend, a decision to halt development of the Learjet 85 and turnover in the C-Suite.
The receipts will be priced at $2.21, a 10% discount to the $2.45 price the stock was halted at before the announcement.
Todd Johnson, a portfolio manager at BCV Asset Management said that given what’s happened with Bombardier lately, that kind of a discount is not unexpected, which holds Bombardier bonds but no shares.
The equity issue still needs to be voted on by Bombardier’s shareholders because of its size, but the company will sell 339.4 million subscription receipts, which can be converted into shares if the deal is approved at a meeting on March 27.
