RE:RE:RE:A part of recent historyHi Temp.
You've got the precise ending in your post.You are a rational and knowledgeable enough poster here, so that I can discuss these events of 2019 with you.
Bombardier is the one at fault here for everything that happened to them 2019, exactly as you say. Simply put, Bombardier became the POSTER CHILD OF STUPIDITY in 2019, and Pierre Beaudoin (PB) was its mascot.
Sorry I seem like I'm too rough on them. But this is why I'm so upset with them. For the past 7 years I & many other shareholders here, had to hold on to their shares without $1 dollar of return, and the fear of Bankruptcy with these PB idiotic decisions. Unless you were a trader of the shares or a Shorter of the shares, to which I'm neither? This financial loss should never have happened. This was a
blunder of Financial decisions on PB's part, and it cost all it's shareholders dearly. Let alone the Bomber almost went bankrupt.
Simply, I agree with a lot of your post above, but take exception with some of your post, to which I respectfully disagree with. Please don't take what I say personally about Bombardier, I love company, and that's the reason I invested over a million dollars to buy shares in the compay in 2016. But I couldn't sit there and watch the stupid financial decision they took when this was happening. Bicente, Club, and many others here on this board, saw my posts of anger here towards PB. I got suspended from Stockhouse for speaking my mind here with some posters, who didn't know what they were talking about, when these 2016 to 2019 deals were happening.
Running Bombardier to the ground by
PB's poor financial decisions is exactly what happened.
I get the distress of Bankruptcy part at the time, but poor financial decision making, was the cause of this scary outcome for the company & it's shareholders. We were all put at risk by this "Idiot Heir's" bad management. The Family was going to lose all their money in the company, and we, all the shareholders, were going to lose their investment. All because of PB's stupidity or incompetence. We were lucky.
To your points. Firstly, Caisse. Don't underestimate Caisse's sneaky interference in the turn of events. BTW this is JMHO, and you don't have to agree with it, but after reading this Globe article that you posted, I'm now convinced that this is exactly what happened. The article says that Bombardier started to falter when they couldn't meet the expenses of
the Airbus/CSeries JV. That's because they went into a bad deal with Airbus, when they sold the CSeries to them (more on this later).
Caisse is no virgin in business. They are smart, and rich investors. Their $1.5B investment in BT is pocket change to them. They administer $400B of Quebec's Public funds. Caisse, and many other world funds in those times wanted to invest in good Infrastructure assets. BT was a great investment. That's why they saw the opportunity to take advantage of PB. They got 30% of BT, and were getting a 9% interest return for their loan. They had PB running it, and they were waiting for Bombardier to go under so they can steal BT. Remember McInnis cement? What Caisse didn't count on is what would happen was, that Bombardier as a company would survive this financial ruin of Bombardier, under PB. Fast forward to what really happened. On the Alstom deal they saw an opportunity to steal BT from the family, and get away clean, without the Quebec public knowing what really happened. Caisse backed the Alstom sale, because Alstom needed money to close the deal and they were just the lender to do that deal. They got 15% of the newly formed company. If Bombardier had sold BT to Hitachi, Caisse would have got nothing? All Caisse would have got was $2.5B from the Hitachi sale of BT, and that's not enough becasue they wanted the Infrastructure asset of BT. Caisse was in this BT deal for the long run, not to save Bombardier. Funds want Investments that they can turn into long term success's, such as Infrastructure assets.That's their mandate, and it's smart because Caisse's money is long term investments. So don't be fooled with the perception of the Alstom deal. Why should Bombardier deal with Alstom in the first place, when Alstom didn't have the cash to buy BT??? Why not deal with Hitachi who had the money and could have paid more, and all cash for BT??? Because Caisse, BT's partner was going to help in the deal. It's all sneaky and calculated politics by Caisse and PB fell for it. Because he's the "idiot heir" of Laurent. He now, is getting smarter. He won't get near the current management of EM & BD. This management duo is the only reason that Bombardier survived.
The CSeries.
I agree that this program was in trouble, and that it was the demise of the whole conglomerate. But this tragic company demise should never have happened. First the CSeries should not have been undertaken against the Duopoly
ALONE. Bombardier should have joined ventured it, with someone with deep pockets, like MHI. If you remember MHI wanted to develop their own regional plane too, and had already spent $4B for nothing. So they would have been happy to buy the CRJ program, and then JV the CSeries with Bombardier. The opportunity for Mitsubishi would have been great. Instead they only got CRJ, and even there they closed all their aerospace program down, because the regional jet demand were coming to an end.
Then in comes Boeing and sues Bombardier in USTC for a 300% teriff.
What does PB do??? He put his tail between his legs, and losse's his composure and falls in the arms of the other snake in Airbus. This PB is not a businessman. He is a catastrophy that shouldn't be in the company.
If he wasn't Laurent's son he would have been fired when he pressed to build the CSeries alone, and none of this would have happened.
Then he listened to the Federal Gov't, and sells the CSeries to Airbus for nothig, when he had Mitsu there trying to get into the Aerospace heavily. Why??? Why, sell to Airbus for nothing. Mitsu would have paid $6B for the CSeries, and taken only 50% of the program, and bought CRJ and even Aerostructures too. The feds said no to China, who was another buyer as well for the CSeries, and PB listened, and the rest is history. Had they even sold the CSeries for less they could still get the tax loss.
The worse part of the Airbus JV, and then sale as I said was, that you don't take a JV partner, and give him over half of the company (50.01%) for free, and then tell them that they can control the future of your program/company to do what they want. This is exactly why Bombardier went down. Instead of putting some controls and pefformance insentives in the Airbus JV, they lost total control of the company. Airbus took advantage Bombradier, and started asking them to pay Cash Call after Cash Call to Airbus for expense's to build Alabama, expand Mirabel, and every other financial request for the CSeries program. Airbus was even thinking of even putting a CSeries facility in Telouse FGS. Who would pay for these expenses?? A company. close to bankruptcy?? Funny when the Bomber just sold their share to Airbus they got $900M for it yet, by that time, they had already spent $900M to the CSeries JV for Alabama and Mirabel. That's why IQ said to the Bomber at the time, that they don't want to put $1 more dollar in the JV with Airbus
Here is what I would have done.
Say to Airbus, you pay $3B for the CSeries. If you don't, then this what happens. You pay for the rest of the program's financial commitments, to develop the program for it's success. I know how to negotiate JV's, I do them daily. JV's could kill you if you don't know what you are doing. PB had the wrong advice, and there weren't any competent Lawyer's in Quebec to help him.
If Airbus would have said no to these terms? Then I would have just closed the program down. I would have shuttered or paused it for 3 or 4 years until I could make it financially viable again. I know I would have had customer problems to deal with, but here is what I would say to those customers. If you want your deposits back then support my decission to shut the program down for 4 years, or else Bombardier is going to go under chapter 11, and go bankrupt (AC), and you guys get nothing. This way I can sort Bombardier's finances out, and build your planes eventually. And then after that, also take a write off for the $6B for tax losses.
As it turned out, three years later Boeing went out and bought Embraer, to shut them down as well, and then as luck would have it, Boeing's Max 8/9 was a catastrophy of a program. I would think that Boeing would have paid the Bomber $6B for the CSeries program then, if they still had it, and even developed the CS500/700 to replace the Max just so that they wouldn't have gone through the problems they did.
This Shuttering or pause of the CSeries would have given the Bomber the chance to restructure the company, and regroup their thoughts, to sell their assets properly, and for the right monies, to the right people, not have a firesale like they did. Hind sight is 20/20 after 6 years.
But to be clear I made these exact suggestions and points to this Stockhouse forum in 2018/19 when this was happening and all I got for this free advice was that poster complained to Stockhouse, and got my other handle 145 suspended and that's when I changed to 859 to keep an eye out on my investment and exchange thoughts with some knowledgeable and good posters here. Whether they're traders or investors, or shorts, I've learned a lot from them.
Sorry for the long post but this had to be done, out of my respect for you, and to convey my exact thoughts on the events. JMHO Temp. Again sorry for this long post on Saturday morning. Cheers
Tempo1 wrote: You are very rough with them. I'm not that much.
I'm not sure that Caisse was happy to intervene with its 1,5 B$ help to back Bombardier. It was a company in deep trouble with a doubtfull near future, even with that 1,5B$. The question is not so much what they ask for their investment than who else would have done that.
The structure of the deal with Alstom and the very bad condition of the train franchise (losses and struggle with some contracts) suggest that Alstom would have not give more cash for the transaction; Caisse had to take shares as payment.
For the Cseries deal, Bombardier was in a death spiral, sales were jammed. Aircraft sales need that buyers have confidence that they could have parts and services for the next 25 years, a condition that Bombardier had not. The last 6 years show that the program bought was largely cash negative at the deal and in its future years. An uncomplete commercial jet development program (even after 6 B$ investment of which 4 B$ are overruns) is not a very valuable asset.
And, all joint venture works the way the Cseries one works. The goal is to avoid a dead end, or an investor who blocks a project. If you don't want to pay, your choice, but we have to go ahead and you will be diluted. It is rough but that works.
It's all the bombardier's fault.