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Bombardier to
Sell off Assets?
Bombardier to sell
assets
The Daily Deal, April 4, 2003
Byline: Laura
King in Toronto
Canada's
ailing Bombardier Inc. said Thursday, April 3, it is spinning
off its snowmobile business and other assets and will
issue up to C$800 million ($544 million) in new shares
as part of a massive restructuring.
The Montreal-based
transportation giant reported a C$1 billion fourth-quarter
loss Thursday and announced it is divesting assets worth
up to C$1.5 billion to focus on its core businesses, primarily
its airplane and rail-car units.
Bombardier
said the share offering and the divestitures will add
more than C$2 billion to its balance sheet in six to nine
months.
In the fourth
quarter, Bombardier posted a net loss of C$1.05 billion,
or C$0.77 cents a share, compared with net income during
the same period a year earlier of C$77.6 million, or C$0.05.
Bombardier
said it is already in talks with prospective buyers of
the Belfast City Airport in Northern Ireland -- that sale
was announced in October -- and of its defense services
division, which provides technical services for military
aircraft at Montreal Mirabel Airport, Quebec City and
Bridgeport, W.Va.
In a separate
statement Thursday, the founding Bombardier family said
it will make a bid with other investors for the 61-year-old
recreational products unit.
Bombardier
is best known globally for its aerospace and rail-car
divisions. But many Canadians are most familiar with Bombardier's
recreational vehicles, mainly its Skidoo brand of snowmobiles
and Seadoo watercraft. The unit also makes all-terrain
vehicles, snow groomers used on ski hills and engines.
The recreational
products division had C$1.7 billion in revenues for the
nine months ended Oct. 31 and employed just under 7,800
people as of Jan. 31. Bombardier said it has formed a
committee of independent directors to oversee the sale
of the recreational products unit. The committee has hired
Morgan Stanley as its financial adviser and McCarthy TEtrault
LLP as legal adviser.
In a conference
call with analysts Thursday morning, new Bombardier CEO
Paul Tellier said his priority is to alter the corporate
culture of the company, a familiar refrain among chief
executives of Canadian businesses that embraced convergence
in the late 1990s but are now downsizing.
Analysts
expected deep cuts after Tellier warned investors in early
March that earnings for 2002 would be about half of what
Bombardier had forecast.
Tellier solidified
his reputation as a turnaround specialist during his tenure
at Canadian National Railway, during which he cut tens
of thousands of jobs and expanded the company through
acquisitions in the United States.
Analysts
and investors are counting on Tellier to whip Bombardier
into shape despite the economic factors stacked against
the company, including a global aviation slump and decreased
demand for corporate jets.
Bombardier
is the third-biggest aircraft maker in the world, behind
Boeing and Airbus, supplying regional aircraft to small
carriers across North America.
Since January,
when Tellier was named CEO, he has slashed 3,000 jobs
in Bombardier's aerospace division. That unit accounts
for about half of Bombardier's revenues.
Tellier said
Bombardier will move away from the principle of "growth
for growth's sake" and concentrate on airplane and
rail cars.
"Now
it's a question of taking a breather and building on what
we've acquired and making money -- making money for our
shareholders," he said.
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