Bombardier Inc Finds No Shortage of Buyers for Mega $1.08-Billion Financing
NationalPost.com
Feb. 27, 2015
Feb. 27, 2015
Coded Expectation
GE4.01- identify Canadian companies and industries that have benefited from increasing global business activity in the last few decades
Summary
Bombardier had been facing financial difficulties lately, with its new line of aircraft behind schedule and over budget. To make up for this financial loss, the company turned to equity to acquire the financing that was needed to keep the company afloat. They planned to raise $600 million in new equity, but noted that number may be higher or lower based on market conditions. The equity raised was a staggering $1.08 billion, which was 80% more than originally expected. This offering allowed foreign companies such as Citigroup to obtain stock at significantly lower prices than the market price, while directly supporting Bombardier. Even with Bombardier’s financial issues, this cash injection should allow them to continue being a successful company for the foreseeable future.
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Bombardier's CS series of jets has been a headache for the company, and is the major source of financial difficulties for the Canadian business (2).
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Connection
Bombardier is a proudly Canadian-owned business that has been struggling for the past couple of years. Its new series of jets have come in over budget and behind schedule. Meanwhile, total sales of jets has gone down as airlines are trying to save as much money as possible, and are preferring to refurbish rather than purchase new aircraft. For a while, many analysts have feared the worst - that Bombardier may be forced into bankruptcy. In an attempt to continue operations, Bombardier looked to raise $600 million in equity. They were lucky enough to receive $1.08 billion in total, mostly from major investors such as CIBC and Citigroup. CIBC is a Canadian company while Citigroup is American. With the help of these domestic and foreign investors, Bombardier will be able to continue its operations for a significant period of time.
The connection asks how Canadian companies have benefited from global business activity, and Bombardier and this round of equity is a perfect example. Without foreign investors, Bombardier would not have reached their goal, and could have shut down. Thanks to global business, this Canadian company will be able to remain in business for the foreseeable future.
The connection asks how Canadian companies have benefited from global business activity, and Bombardier and this round of equity is a perfect example. Without foreign investors, Bombardier would not have reached their goal, and could have shut down. Thanks to global business, this Canadian company will be able to remain in business for the foreseeable future.