Bombardier Inc. announced today that it has signed a sale and purchase agreement for its recreational products segment with Bombardier Recreational Products Inc., a corporation formed by Bain Capital, members of the Bombardier family and the Caisse de dépôt et placement du Québec.
On Aug. 27, 2003, Bombardier announced that it had reached an agreement in principle to sell its recreational products business for an aggregate purchase price of $1,225 million, subject to certain price adjustments, for a net purchase price of $1,075 million.
As a result of further negotiations between the Corporation and the Purchaser, the net purchase price has been reduced by an amount of $115 million, primarily due to the continued appreciation of the Canadian dollar relative to the U.S. dollar which adversely affects the value of the recreational products business. Consequently, the revised net purchase price stipulated in the agreement is $960 million, of which $910 million will be paid in cash and $50 million will be paid by the issuance of preferred shares of the Purchaser’s parent company.
As is customary for such transactions, cash proceeds will be impacted at closing by adjustments for variation in working capital, pension plan funding and other off balance sheet items. These are currently estimated to be in the range of $160 million in favor of the purchaser.
The transaction is expected to close during the current fiscal year and is subject to the completion of the Purchaser’s committed financing, obtaining the consent of governmental authorities and fulfilment of other customary conditions.
“With the signature of this agreement, our recapitalization program is now all but complete,” said Paul M. Tellier, President and Chief Executive Officer of Bombardier Inc. “The price adjustment is acceptable given the currency fluctuations which occured since we entered into the initial agreement to sell the recreational products segment. Bombardier Inc. can now focus on its aerospace and transportation operations.”
In connection with the sale, the Corporation and the Purchaser will enter into certain other agreements, including a trademark license agreement under which Bombardier will license to the Purchaser certain trademarks which will continue to be owned by Bombardier. In addition, certain floor plan and other financing arrangements will be entered into by the Purchaser with Bombardier Capital.
Bombardier’s Board of Directors approved the definitive agreement following a recommendation by the independent committee chaired by L. Denis Desautels. The committee was created to supervise the sale process for the recreational products business and review the related party transaction. In reaching its decision, the Board received fairness opinions confirming the fairness of the consideration for the transaction from its own financial advisor, UBS, and from Morgan Stanley, financial advisor to the independent committee. Directors of Bombardier who are members of the Bombardier family abstained from participating in Board meetings in which the transaction was considered and did not vote on the transaction.
Bombardier Recreational Products designs, develops, builds, distributes and markets Sea-Doo® watercraft and sport boats, Ski-Doo® and Lynx® snowmobiles, Johnson® and Evinrude® outboard engines, Evinrude direct injection and Evinrude E TEC™ technologies, Bombardier™ ATVs, Rotax™ engines and karts, as well as utility vehicles.
Bombardier Inc., a diversified manufacturing and services company, is a world-leading manufacturer of business jets, regional aircraft, rail transportation equipment and motorized recreational products. It also provides financial services and asset management in business areas aligned with its core expertise. Headquartered in Montréal, Canada, the Corporation has a workforce of some 75,000 people and manufacturing facilities in 25 countries throughout the Americas, Europe and Asia-Pacific. Its revenues for the fiscal year ended Jan. 31, 2003 stood at $23.7 billion Cdn. Bombardier shares are traded on the Toronto, Brussels and Frankfurt stock exchanges (BBD, BOM and BBDd.F).
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