Bombardier Inc. has just agreed to a $635-million deal involving its space in Toronto
Bombardier Inc.’s drive to bolster its cash reserves is getting a lift from the booming real estate market in Canada’s biggest city.
The aerospace and transportation giant has agreed to sell its Downsview facility in Toronto to Canada’s Public Sector Pension Investment Board for about $635 million. The transaction is expected to close in the second quarter, increasing cash by more than $550 million after costs, Bombardier said in a statement late last week as it reported earnings.
The deal buoys Chief Executive Officer Alain Bellemare’s goal of fortifying Bombardier’s balance sheet, which is saddled with about $9 billion of debt from pricey development programs for the CSeries airliner and the Global 7000 business jet.
“[The Downsview sale] further improves Bombardier’s liquidity position,” CIBC World Markets analyst Kevin Chiang wrote in a note to clients, as quoted by Bloomberg. “We continue to see the company execute against its long-term strategy, further de-risking its operations and balance sheet.”
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Bombardier will continue to operate from Downsview for as many as three years after the land sale closes, with options for two one-year extensions.
Production will be moved to a 38-acre site at Toronto Pearson International Airport in about three years, Bellemare said on a conference call with analysts. The company plans to open a final assembly plant for its Global business jets at Pearson and hasn’t decided where to build the Q400 turboprop, which is currently made at Downsview.
Bombardier said in January that it had begun reviewing options for Downsview because the company uses only about 10% of the 375-acre site and bears the entire cost of operating a 7,000-feet runway. Cowen & Co. analyst Cai von Rumohr said in February that Downsview could fetch as much as $1 billion.
