Bombardier Inc. T.BBD.A

LTD - $4B is realistic

[PabloLafortune]

First,  #1 Q3 LTD 9.2B.////  #2 Alstom said Euro 5.3B what they will pay out less 2.5B Euro of shares so 2.8B cash @1.17 or $3.28B.  LTD after applying 5.9B.////  #3 3a) BBD invested 350M Euro (427M USD) in BT in Q2 that should be returned. 3b) they will also own shares in Alstom currently estimated valued of 627M USD. 3c) Finally, I believe they have upside of 300M Euro on the deal (which would put them right back to the 4.2B originally estimated in February 17 press release). Total 1.35B USD.  LTD after that 4.55B.////  #4 further upsides. 4a) they have option to buy CDPQ's shares in Alstom could be worth $200M USD? 4b) they may have bought some LTD back (2025 and 2027 bonds going up too quickly IMO) $100M USD? 4c) maybe they sold some R/E $300M USD. 4d) BA Q4 cashflow (they break even at $1B. Q4 revenue north of $2B. Lots of cash coming in net of reduced backlog ($300M?) 500M? again, a guess. 4e) they had pro-forma cash on hand at Q4 of $600M. GD is running negative $600M on the same metric. $800M there?  Total for this section 1.9B. LTD after that 2.65B. ////

I admit to my optimism but in my view $4B LTD is quite realistic. YMMV.

Also, I do believe they will bring it further down with an equity raise but that's another story.

[raphaelle2]

Agreed Pablo. Before Covid BA LTD was forecasted at 2-2.5B$ EM took the job with that estimate in mind. Now they have to find this extra 1.5-2 B$ to take off. Many possibilities to get this missing sum. We will know more about their plan next month.

[PabloLafortune]

Raph, a good amount to raise would be USD 1.9B or C$2.4B @C$1.50 (1.6B shares). Brings debt down to $2B and gives us a $1.92SP at 8B (USD) EV, $1.28 at 6B EV, $2.84 at 10B EV.  Debt is under control, interest cost way down. Take the A's private (like BRP) would help as would a reverse 10:1 and change the voting ratio from 10:1 to 6:1 (goodwill gesture) for the A's. They'd even be

[PabloLafortune]

1.6B A shares of course...

[raphaelle2]

BBD , contrary to other similar co has a lot of possibilities to raised money. Their large and complex shares structure, the Family control and long term commitment, new mgt, parent co.like BRP and finance partners like Bain...All this offers many ways to think out of the box... and surprize many rating agencies! E M is due to make a big move. He is still consider part of the solution, but not for

[1sergedompierre]

i like that post Raph and agree with it but what do you mean by "but not for too long ..." and anyway  we should know more in early February on their result 2020 day ....SD

[PabloLafortune]

Raphaelle, however its done, I think we agree that addressing the debt further (from $4B - if its 6-7B g help BBD) is needed even after BT sale for the long term health of the company and all its stakeholders. On paper it will seem worse for B shareholders but in reality we will all be better off. All I hope for is "pousse mais pousse egal"...

[johnney]

PabloLafortune, don't you find out that 2.1B shares of B, and over 300M of A isn't enough! Raising more shares out, to lower the debt or something else!!

[BBDB859]

Easy there with the reverse split Pablo. Everything else you wrote is fine. Taking the A's private I'm ok with. But that's the Families choice. If they want to stay in, or take their money out or some of it and go. But even there it's too early IMO. But the negative split of the B's are going to hurt the ascend of the B's like crazy. Especially in the short term. IMHO

[PabloLafortune]

Hi 859, I understand your concern about the reverse split. My recent experience with Precision Drilling (PD) where they did a 20:1 reverse split, has been good. Prior to that, they had trouble getting volume. It was 80-85 cents presplit now $28. //// Regarding the debt, strictly as an observer, 3 things.  first, I'm guessing if its $4B after Q4, that's too high. It should be

[BBDB859]

Hey Pablo. We've had this negative/reverse split discussion here many times.  The fact to the matter is that when you get a positive split, it's great, because your wealth/investment grows exponentialy. Just like Dollarama and Tesla recently.  As for Precision Drilling. I feel sorry for the holders of the stock. 20 to 1 split. PD's share price, I've sold at $40 before.

[johnney]

Pablolafortune, you said on your post that you experianced the reverse split about Precision drilling a 20:1 reverse split, i went and checked on google and saw that when they reveresed split the stock,they dindn't even have 300M shares outstanding! What do you think the Bomber with more than 2.1B of B outstanding, at $0.60, don't they have much more chance to reverse split their stock

[PabloLafortune]

Johnney, its just my opinion.  main thing is, a lot of investors don't like to invest in "penny" stocks - they associate high price with success (Amazon, Tesla, etc) and penny stocks with going out of business. There are also many rules (margin, etc) that disadvantage penny stocks.  Also, the way Bombardier sits (or was sitting) at 59 cents bid and 60 cents ask, it benefits

[johnney]

PabloLafortune, you're right about penny stocks investors, and many institutions or hedge funds can't buy penny stocks, cause it' their politics, and others won't buy below $2 either! Just hope that this won,t happen to the bomber at these prices!

[flamingogold]

Pablo, historically speaking reverse splits are a horrible move and will be here too. It will crush any investor over $1 and there are plenty. Reverse splitting to get the stock over $5 so big funds can start buying would be an advantage, but in the case of BBD they still have an image and trust problem that they need to address. Simply reverse splitting would invite shorts to pile on.

[PabloLafortune]

Admittedly, my opinion isn't based on any empirical data or anything like that, just my personal experience with PD recently.  In any event, its neither here nor there really as its up to the family I mean the Board of Directors...

[bicente]

I agree that reverse stock splits are not necessarily good BUT if the bomber times it well it could work ..If the bomber follows it up with refinancing the debt at 3-5% , lowers its production costs by 10% and finally decides to eliminate the A&B shares structure  to only have one share , expands its aircraft service for business jets around the planet ... there are many options out there

[BBDB859]

Pablo. I gave the reverse split a little more thought, and I just wanted to say that Bicente is right in his response below. It's just timing of the split. If the Bomber does a reverse split at the $5.00 range share price, and a 2 for 1 split. Them I would support it and won't sell any shares. Meaning the share price will be $10.00 and I'l gladly have half the shares I own now. BTW.&

[johnney]

BBBD859, if ever a reverse split happens on this stock, just hope not, that they won't do it around the $1.00, 3 or 4 i don,t care!

[PabloLafortune]

859, the way things are going they may not need it (LOL). Seriously, you wouldn't believe how many people are invested in the stock market these days that don't know about share count, enterprise valuation, market cap, debt, cashflow or any of that.  They only look at the share price.

[BBDB859]

Listen. No one is smarter than these guys in the market today. Fundementals are out the window sometimes with the way these guys control the SP.  If I were savvy enough, and not gullible? I would have sold at $5.50. Or even gotten out at $4.70. What this company (AB & PB) did and told investors, was all prison material. No one can gaurd against that.

[Shamhorish]

no one can tell !!!!, not untill the Alstom & BT deal is closed  there are so many possibilties and e can be sure that Eric Martel and his new CFO Bart Demosky are working on that right now (Bart Demosky replaced Di Bert, thanks God we got rid of this di bert guy) BA now has qualifeid management, and i am sure they will lead BA to free cash flow and hope in a few ywars, BA

[Mauserintime945]

in a few ywars, BA will start to pay dividents again,,,,,, Please,please, please, i dont have that much time to wait, I just wont my money back 

[johnney]

Shamhorish right! No one can tell till!!!!!!!!!!!!!!!!!!!

[Jim99999]

Thanks for this, Pablo, it is nice to understand other's point of view. I am not as optimistic as you, but I certainly hope you are right and I am wrong. Jim

[PabloLafortune]

Jim9999, regarding the point I made about upside on the BT deal, in Alsthom's press release yesterday, they mentioned that the 750 Euro bond issue was to complete the BT deal and general corporate purposes. Well, at 5.3B Euro, they already had the money before the Euro bond issue (2B shares to CDPQ, 700M new shares to CDPQ, 500M shares to BBD, 2.1B share issue)....

[Jim99999]

Thanks, Pablo. If I am reading this correctly, Alstom raised a minimum of approx 5.1B Euro through shares/share offering (2.63B CDPQ, 500M BBD, 2B offering). At the time they were considering an additional bond offering of approx 400M. Based on this, I will suggest that actual amount of transaction will be a minimum of approx 5.5B Euro. Alstom capital increase results Jim

[PabloLafortune]

Something like that, hopefully more... Alstom capital increase results Jim [/quote]