Finance News Follow us to find the latest Finance news
OTTAWA ? The Canadian government is pushing for changes in the dual-class share structure of embattled aircraft manufacturer Bombardier Inc. in return for possible financial aid, officials acquainted with the plans said.
Prime Minister Justin Trudeau’s government, which is reviewing a request by Bombardier to assist fund the development of its C Series jet, is concerned about the company’s corporate governance rules through which the Bombardier family controls the business, three people acquainted with the file said, speaking on condition they ‘t be identified because discussions are ongoing.
If the Canadian government imposes a governance condition, it might force Bombardier right into a tough choice: loosen family control of the company or give up federal funding. The 73-year-old Bombardier continues to be reduced to a penny stock as investors lose confidence inside a company that’s 2 yrs behind schedule and about $2 billion over budget within the growth and development of its C Series jet. The Trudeau government, meanwhile, faces its very own risk that alterations in governance could leave Bombardier susceptible to a takeover.
Related
- Bombardier Inc plans reverse stock split as shares dive to lowest level in 25 years: sourcesBombardier’s biggest gamble: How everything went so wrong with the CSeries dream
Economic Development Minister Navdeep Bains, asked on Feb. 2 whether he was pressing for changes towards the share structure, would say only the government continues to review its options. “We simply want to do a thorough job of looking at the business case,” said Bains, Trudeau’s point-man on the Bombardier file. Kelly Acton, a spokeswoman for Bains, declined to comment Friday.
Members from the Bombardier group of Quebec control the maker through its dual-class share structure by holding more than 50 % of the voting rights in the company, despite only having a minority equity stake. Isabelle Rondeau, a Bombardier spokeswoman in Montreal, declined to comment Friday on the talks using the authorities.
The company has been trying out its governance. Pension fund manager Caisse de Depot et Placement du Quebec, in exchange for its $1.5 billion purchase of Bombardier’s rail division last year, won some concessions together with a say in the appointment of independent directors.
–With the help of Frederic Tomesco.
Bloomberg News
