Canada Weighing How Best to Invest in Bombardier, Bains Saysby
Innovation Minister considering all options in aid request
CEO confident both sides can reach ‘win-win’ agreement
Canada is considering different ways to provide a cash injection to struggling manufacturer Bombardier Inc., with Innovation Minister Navdeep Bains saying it’s now a matter of how -- not if -- an aid package can be delivered.
The government is prepared to invest in the firm and is considering all its options, including a direct equity stake, a loan or a repayable grant, so long as the company can demonstrate it has a long-term plan and that it’s committed to keeping jobs and conducting research within Canada, Bains said Wednesday in Ottawa.
“Bombardier’s a key anchor firm. So it’s not a matter of if we will invest, it’s how,” he said in an interview with Bloomberg TV Canada’s Amanda Lang, before acknowledging his phrasing is new. “What it says is a clear direction. We’re committed to the sector, we’re committed to the company. But we also want to be responsible about how we deploy Canadian taxpayers’ money.”
Bombardier shares rose C$0.04 to $1.77, or 2 percent, as of 3:58 p.m. Toronto time on Wednesday. The widely held shares are up about 31 percent through 2016, though have fallen in recent months from a July 12 high of C$2.16.
The Montreal-based company formally sought $1 billion in federal aid nearly a year ago and the two sides have been locked in a standoff since then over corporate governance concessions. That proposal involved a direct investment by both the federal and provincial government, though the latter has since finalized its own investment.
Bombardier President and Chief Executive Officer Alain Bellemare, speaking to reporters Wednesday in Ottawa at the Public Policy Forum conference, said he was confident the two sides can reach a “win-win” agreement on an aid package.
“It has to make sense for the government and for Bombardier as well,” he said. A federal investment would give added confidence to Bombardier customers and to the market overall, he said. Asked about the change in phrasing from Bains, Bellemare said “aerospace is a very critical industry for Canada, that is what you can read into this.”
Canada doesn’t “want to get a deal done for the sake of getting a deal done,” Bains said earlier Wednesday. He added that government officials met with the company Tuesday in Montreal, where he announced C$54 million ($41 million) in funding for a Bombardier-led consortium of firms and academic institutions developing new aircraft technology.
“It’s about how do we focus on the future success of the company, which is so critical to the success of the aerospace sector,” Bains said.
The minister said Canada is “willing to make the investment as long as it translates into the sector growing, as long as it translates into more jobs and more” research and development, and provided he is convinced the company has “a robust plan for long-term success,” including keeping the head office in Canada.
Bains has said job guarantees are a major issue in “very fluid” negotiations. In exchange for aid, the federal government was seeking to dismantle the dual-class share structure that allows the founding families to control the company with only a minority stake. Bombardier rejected that proposal and has said it doesn’t intend to change its share structure.