RE:MARTELBBDB859 wrote: Will Martel be able to fix this blunder?
In hindsight.
-The CSeries was a travesty. Even though a good product. Leave it to Bombardier to screw up. It was the downfall of the Bomber.
-All Belemare ever did fof his 5 year plan was divest every asset of the Bomber until there was nothing left to sell.
-Come Martel. Let's see what "The reshaping of the company's Capital Structure" means to us shareholders.
First Dilution. Second, possible positive quarters.Third.possible partial sale of BBA. Then fourth of course, the proverbial increase in MARGINS at BBA. That can only happen through Martel's running of BBA, as a profitable company. That is within his control. Fifth the renegotiating of the debt. As Seaking Alpha said today. After the sale of BT. There is still going to be a $6.5 Billion debt of 7.1% average. I happen to think that Alpha is being a little pessimistic here. I think the debt will be closer to to $5 Billion. With a debt service of $350 mill.
BA has to carry the above debt and produce great margins to the tune of 9% to get even anywhere near profitability. Othewise the above alternatives will occur. Either a partial sale of BT and even a heavy dilution to the B's to raise capital.
Whatever the end result of this Company will be in the next year? Martel has to execute flawlessly. I hope that they can close the Belfast deal as well, as fix the Legacy problems, and get those trains out the door before the Alstom closing as well.
Martel has his work cut out for him. But it's not impossible. The profit Margins at BBA are within his control.
Let's just see where he'll take us.
BBAB859
I am curious as to how you think dilution will occur. The family will not give up control, nor do they seem inclined to put in any more money. Therefore, no more shares will be issued, in my opinion.
Debt of less than $6.5B seems unlikely to me, especially with the Spirit deal in question. The Alstom deal was projected to net $4.2-4.5B, less the anticipated approximately $1B cash on hand at BT that goes with BT to Alstom, for a real net of $3.2-3.5B. As well, BBD is required to pay 50% of the balance owing on the new $1B credit facility when Alstom closes. I do not see BBD being able to reduce their debt by more than $3B, especially if the Spirit deal falls through. On top of that, the average rate will be closer to 7.5% as near as I can tell.
Martel must increase revenues, improve margins, and lower interest expense if BBD is to succeed.
Jim