OTTAWA ? The Canadian government is pushing for alterations in the dual-class share structure of embattled aircraft manufacturer Bombardier Inc. in return for possible educational funding, officials familiar with the plans said.
Prime Minister Justin Trudeau’s government, which is reviewing a request by Bombardier to help fund the development of its C Series jet, is worried concerning the company’s corporate governance rules through which the Bombardier family controls the company, three people familiar with the file said, speaking on condition they not be identified because discussions are ongoing.
If the Canadian government imposes a governance condition, it might force Bombardier right into a tough choice: loosen family charge of the business or quit federal funding. The 73-year-old Bombardier continues to be reduced to a penny stock as investors lose confidence in a company that’s two years behind schedule contributing to $2 billion over budget within the development of its C Series jet. The Trudeau government, meanwhile, faces its very own risk that changes in governance could leave Bombardier vulnerable to a takeover.
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Economic Development Minister Navdeep Bains, asked on Feb. 2 whether he was pressing for changes to the share structure, would say just the government is constantly on the review its options. “We simply wish to accomplish an intensive job of looking at the business case,” said Bains, Trudeau’s point-man on the Bombardier file. Kelly Acton, a spokeswoman for Bains, declined to comment Friday.
Members from the Bombardier family of Quebec control the maker through its dual-class share structure by holding more than 50 % of the voting rights in the company, despite only owning a minority equity stake. Isabelle Rondeau, a Bombardier spokeswoman in Montreal, declined to comment Friday around the talks using the federal government.
The company has been trying out its governance. Pension fund manager Caisse de Depot et Placement du Quebec, in return for its $1.5 billion purchase of Bombardier’s rail division last year, won some concessions together with a say in the appointment of independent directors.
–With the help of Frederic Tomesco.
Bloomberg News
