MONTREAL — Plane and train maker Bombardier Inc, whose stock has hit its minimum in Twenty five years, will soon announce plans for any reverse stock split, two sources acquainted with the matter said, to be able to remain a part of Canada’s benchmark stock index.
The sources, who are not authorized to publicly discuss the plans, said Bombardier’s board of directors had already approved the program before the stock dipped below $1 a week ago.
A Bombardier spokeswoman said the company does not comment on its stock price or its stock generally.
Bombardier stock has declined a lot more than 33 per cent year up to now, trading at 89 Canadian cents in Toronto on Wednesday, because it has struggled to locate buyers because of its new 100-150 seat CSeries passenger jet.
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If the shares stay at these levels, the stock could get ejected from Canada’s benchmark S&P/TSX composite index, forcing index funds to sell the stock and putting more downward pressure on the share price.
To be considered a element of the index, a stock must have a volume-weighted average cost of $1 within the 3 months before the quarterly review. The following quarterly review arrives at the end of February, and will cover the period from December through February.
A share consolidation, which may allow Bombardier to regain compliance with index rules, is expected to be announced once the company reports fourth-quarter results on Feb. 17, said one of the sources.
A reverse stock split would not alter the worth of the company. The sources could not say the number of old shares would equal a new share.
Bombardier had 2.23 billion shares outstanding, as of October 2015.
The CSeries jet faces fierce competition from rival plane makers Boeing Co and Airbus Group SE. The smaller of these two CSeries planes, the CS100, which received certification in December from Transport Canada, would be to enter service in 2016 after many years of delays and billions of dollars in cost overruns.
Broader concerns about the aerospace market also have hit shares of Bombardier rivals. Boeing’s stock has declined more than 17 percent since the start of year, while Airbus shares have dropped a lot more than 13 pe rcent.
? Thomson Reuters 2016
