Airbus and Bombardier to become partners in C Series programme

    Airbus and Bombardier signed (16-Oct-2017) an agreement to become partners in Bombardier‘s C Series aircraft programme;

    • Agreement scope: Airbus will provide procurement, sales and marketing, and customer support expertise to the C Series Aircraft Limited Partnership (CSALP). According to Bombardier and Airbus, the C Series is highly complementary to Airbus’ existing single aisle aircraft portfolio, which focuses on the higher end of the single aisle business;
    • Interest: Airbus will acquire a 50.01% interest in CSALP. Bombardier and Investissement Québec (IQ) will own approximately 31% and 19% respectively;
    • Impact on Canadian aerospace sector: Airbus affirmed it is strongly committed to Canada and its aerospace sector with Canadian suppliers extending their access to Airbus’ global supply chain. Airbus and Bombardier expect the partnership will “strengthen and accelerate the C Series’ commercial momentum”, by leveraging Airbus’ supply chain expertise. CSALP’s headquarters and primary assembly line and related functions will remain in Québec, with the support of Airbus’ global reach and scale. Airbus’ global industrial footprint will expand with the Final Assembly Line in Canada and additional C Series production at Airbus’ manufacturing site in Alabama, US;
    • CSALP funding plans: Bombardier will continue its current funding plan of CSALP and will fund, if required, the cash shortfalls of CSALP during the first year following the closing up to a maximum amount of USD350 million, and during the second and third years following the closing up to a maximum aggregate amount of USD350 million over both years, in consideration for non-voting participating shares of CSALP with cumulative annual dividends of 2%, with any excess shortfall during such periods to be shared proportionately amongst Class A shareholders;
    • Call and put rights: Airbus will benefit from call rights in respect of all of Bombardier’s interest in CSALP at fair market value, with the amount for non-voting participating shares used by Bombardier capped at the invested amount plus accrued but unpaid dividends, including a call right exercisable no earlier than 7.5 years following the closing, except in the event of certain changes in the control of Bombardier, in which case the right is accelerated. Bombardier will benefit from a corresponding put right whereby it could require that Airbus acquire its interest at fair market value after the expiry of the same period;
    • CSALP board of directors: Will initially consist of seven directors, four of whom will be proposed by Airbus, two of whom will be proposed by Bombardier, and one of whom will be proposed by IQ. Airbus will be entitled to name the CSALP chairman;
    • Warrants: Subject to obtaining the required approval from the Toronto Stock Exchange, the transaction provides for the issuance to Airbus, upon closing, of warrants exercisable to acquire up to 100 million Class B shares of Bombardier, at an exercise price per share equal to the USD equivalent of CAD2.29 (USD1.80), which represents the volume weighted average price of the Class B Shares over the five trading days ending 13-Oct-2017. The warrants will have a five year term from the date of issue, will not be listed and will provide for market standard adjustment provisions, including in the event of corporate changes, stock splits, non-cash dividends, distributions of rights, options or warrants to all or substantially all shareholders or consolidation. The issuance of the warrants and their terms were negotiated between Bombardier and Airbus at “arm’s length” and will not materially affect control of Bombardier. Security holder approval will be required under Toronto Stock Exchange rules due to the fact that the warrants will be issued later than 45 days from the date upon which the exercise price was established. Such approval is expected to be obtained by way of written consent of shareholders holding more than 50% of the voting rights attached to all of Bombardier’s issued and outstanding shares;
    • Approvals: The transaction has been approved by the boards of directors of both Airbus and Bombardier, as well as the Cabinet of the Government of Québec. The transaction remains subject to regulatory approvals, as well as other conditions usual in this type of transaction. There are no guarantees that the transaction will be completed and that the conditions to which it is subject would be met. Completion of the transaction is currently expected for the 2H2018. [more – original PR]