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Bombardier Inc. T.BBD.A

Alternate Symbol(s):  BDRPF | T.BBD.PR.B | BDRXF | T.BBD.PR.C | T.BBD.PR.D | BOMBF | BDRAF | T.BBD.B | BDRBF

Bombardier Inc. is a Canada-based manufacturer of business aircraft with a global network of service centers. The Company is focused on designing, manufacturing and servicing business jets. The Company has a worldwide fleet of more than 5,000 aircraft in service with a variety of multinational corporations, charter and fractional ownership providers, governments and private individuals. It operates aerostructure, assembly and completion facilities in Canada, the United States and Mexico. Its robust customer support network services the Learjet, Challenger and Global families of aircraft, and includes facilities in strategic locations in the United States and Canada, as well as in the United Kingdom, Germany, France, Switzerland, Austria, the United Arab Emirates, Singapore, China and Australia. The Company's jets include Challenger 350, Challenger 3500, Challenger 650, Global 5500, Global 6500, Global 7500 and Global 8000.


TSX:BBD.A - Post by User

Bullboard Posts
Comment by pablo87on May 08, 2020 8:53pm
183 Views
Post# 31005938

RE:BBd should be proactive in strategic alternatives & more...

RE:BBd should be proactive in strategic alternatives & more...Alstom cancellation could be a blessing in disguise. If BT cash flow stabilized post legacy to 6% on $9B revenue, I wonder how much govt(s) debt @2% they could comfortably service, $5B perhaps? Use the money to pay back CDPQ and the rest ($2.8B?) to pay down the debt. Keep all the cashflow ($400M?) after interest. Report it separately. No cross guarantees. Worse case it barely covers interest payments it's still worth something (Absolute worse case, it goes belly up BBD isn't much worse off than under the Alstom scenario). Best case it generates $400M for years to come, maybe you even sell it for another $4B down the road. If you're worried about future skeletons, be more cautious in your bidding approach, take less margin for less risk. The debt is a black hole for sure but is there a point to selling a business that generates good cashflow (assuming) for not that much cash? Key of course is the formula $9B x net margin >> $5B debt x interest rate. If you can refinance $6.5B main debt @5% (refer to Boeing deal), the BT cashflow could cover all the interest. They'd actually be better off than selling BT outright. This is the problem with a lot of these asset sales. you're losing a lot of cashflow and not reducing debt enough or at all. The interest is consuming the proceeds (do the math - inherit 100 houses, borrow $10M @10%, you have to sell a house a year to cover the interest) Alstom were smart. They took an option for 75M. If cashflow is still not there, they walk away or they re-negotiate. If it's there, they make out like bandits. As does CDPQ. Whereas BBD loses BT's cashflow if it's all good and gets stuck with it if it's still struggling. In many ways, the Alstom deal was similar to the C series deal. All the upside was on the other side.
Bullboard Posts