RE:RE:RE:RE:RE:RE:Entreprise familiale Hey Pablo.
I've been thinking regarding your arguments, about reducing the LTD quickly, and I've deduced a few things from our discusssions.
Yes you are right, if they did a share issue this past year, they would, or could have raised $2B to $3B to pay off half of the $5.7B.
They would have also diluted us & the Family holdings, by almost 50% for that small amount of $3B. Because if they issued another 60M
NEW shares at $50 they would just to get $3B? Assuming of course that, there was a market for the shares, and they could sell them to Institutions, without having to discount the shares drastically to those Institutions to buy them, and having to hand out options, and warrants, discounts, & commissions, and kissing the Institutions azzes for the money.
Because remember they did a share issue in 2018. Where they got $700M,
from the 4 or 5 THIEVES I call them. They were UBS, Credit Suisse, TD, National Bank, each got 1 fifth of the 180M shares issued or 20% each. Then, there was a smaller group of (Goldman,Desjardis,Citibank & CIBC,) that got the other 20%. The other issue is that, is there an appetite out there for these Institutions today, to buy $3B worth of
Bombardier shares in these hard economic times?
Now I understand that carrying a huge Debt is a problem, and they would have saved $$200M or so every year in Interest, by doing the Share Issue, and reduce the risk of carying that huge Debt. But the real question is . At what price to the Family???? And at what price to the Shareholders???
This Family, is the old style Family. They already
only own about 10% of the total outstanding shares of 95M right now. What Percentage would they own of the shares, if they Issued another 60M shares, to get that $3B? They would own less than 5%. They would control a $10B corporation (in 2025), with less than 5% of the shares, & control it through the voting shares only. IMHO, there would be
wars for them to leave control of the company, & Sell their share of Bombardier by the Public/Institutions at EVERY annual INVESTORS meeting. They would be forced to sell their voting shares by the Institutions for say $5B or $6B and get out. Just like Magna did with Frank Stronach.
So, yes they're an old fashioned outfit,. Yes PB is a dumb man. Yes they could do zillions of other things. But this Family is old fashioned, and they want to clean the Balance sheet properly, instead of going to the Public, or Institutions for money to retire the LTD. This Debt is something they brought on to themselves, by running the company(s) into the ground, and they'll retire the LTD, the old fashion way. By real +FCF from the company that's left behind. Yes it'll take longer, and they'll lose half a Billion or so in Interest. So what? That's their mentality, and I'm starting to respect that. Because they'll stay financially prudent in the next 3 to 4 years, thanks to Bart D, and they can always take that "SHARE ISSUE" route anytime, if they need to raise capital for a real desparate reason, like saving the company, in case of a real downturn in the economy, or a necessity of a huge re-development program etc.
Cheers
PabloLafortune wrote: 859, I respect your opinion and I understand what you're saying but its clear to me that the company is operating sub optimally from a capital structure point of view. Sure they're making good progress but they're taking unnecessary risks carrying so much debt. Hopefully it works out this time. In my opinion.