Bombardier Inc plans reverse stock split as shares dive to lowest level in 25 years: sources

MONTREAL — Plane and train maker Bombardier Inc, whose stock has hit its minimum in Twenty five years, will quickly announce plans for a reverse stock split, two sources acquainted with the problem said, in order to remain a part of Canada’s benchmark stock index.

The sources, who aren’t authorized to publicly discuss the plans, said Bombardier’s board of directors had already approved the program prior to the stock dipped below $1 a week ago.

A Bombardier spokeswoman said the organization does not discuss its share price or its stock in general.

Bombardier stock has declined a lot more than 33 per cent year to date, trading at 89 Canadian cents in Toronto on Wednesday, because it has struggled to find buyers for its new 100-150 seat CSeries passenger jet.

Related

Bombardier’s biggest gamble: How everything went so wrong with the CSeries dreamBombardier Inc shares fall below $1 – its minimum in almost 25 years

If the shares stay at these levels, the stock could get ejected from Canada’s benchmark S&P/TSX composite index, forcing index funds to market the stock and putting more downward pressure around the share price.

To be considered a component of the index, a regular should have a volume-weighted average price of $1 within the three months before the quarterly review. The next quarterly review arrives at the end of February, and will cover the period from December through February.

A share consolidation, which may allow Bombardier to regain compliance with index rules, is expected to become announced when the company reports fourth-quarter results on Feb. 17, said one of the sources.

A reverse stock split wouldn’t alter the worth of the organization. The sources could not say the number of old shares would equal a new share.

Bombardier had 2.23 billion shares outstanding, as of October 2015.

The CSeries jet faces fierce competition from rival plane makers Boeing Co and Airbus Group SE. Small of these two CSeries planes, the CS100, which received certification in December from Transport Canada, would be to enter service in 2016 after years of delays and billions of dollars in cost overruns.

Broader concerns concerning the aerospace market also have hit shares of Bombardier rivals. Boeing’s stock has declined more than 17 percent since the start of year, while Airbus shares have dropped more than 13 pe rcent.

? Thomson Reuters 2016