RE:RE:Letter of CreditSome elements:
- the yellow highlight section of your post is from the Club post not mine. But I agree with him that the security protect Alstom in the event of a bankruptcy. And in the case of Bombardier is alive, Alstom don't have to sue for getting the cash, it has only to call the garantee from the bank and it will receive the cash 4 days later. Once issued it only a letter between the bank and Alstom, Astom only to call it with the proof that the trigger condition is meet and it get the cash. Bombardier can do nothing. It's a strong security.
- With the post prior to the present post, we know now what is the trigger :
having received an order, judgment, direction, formal injunction, formal injunction from any Governmental Authority, court or arbitral body having competent jurisdiction on the Relevant Claim;
- The Bank guarantee has not been asked at the closing, it is mandatory by the agreement signed in september 2020 (the final agreement) , here again for the purpose of securizing the legal consequences from past contracts.
- This guarantee is not linked with the closing adjustments and the arbitration process
- Transactions take time and it is usual to have procedures on the signed agreements to manage the natural change occuring between the agreement and the closing ( 4 month). The arbitration between Alstom and Bombardier is the last step to fix the argument between Alstom and Bombardier about the value of some working capital elements at the closing.
- All opinion are good about the chances of Bombardier to win the arbitration but don't forget that the rail division consumed -1,282 M$ of cash (FCF) in the 12 months of 2020, exactly -107 M$ per month. What is the reduction asked for the 4 months ?