Airbus and Bombardier signed an agreement on
Monday to become partners on the C Series aircraft programme.
Under the agreement, Airbus will provide
procurement, sales and marketing, and customer support expertise
to the C Series Aircraft Limited Partnership (CSALP), the entity
that manufactures and sells the C Series. At closing, Airbus will
acquire a 50.01% interest in CSALP. Bombardier and Investissement
Québec (IQ) will own approximately 31% and 19% respectively.
CSALPs headquarters and primary assembly line
and related functions will remain in Québec, with the support of
Airbus global reach and scale. Airbus global industrial
footprint will expand with the Final Assembly Line in Canada and
additional C Series production at Airbus manufacturing site in
The single aisle market is a key
growth driver, representing 70% of the expected global future
demand for aircraft. Ranging from 100 to 150 seats, the C Series
is highly complementary to Airbus existing single aisle aircraft
portfolio, which focuses on the higher end of the single-aisle
business (150-240 seats).
This is a win-win for
everybody! The C Series, with its state-of-the-art design and
great economics, is a great fit with our existing single-aisle
aircraft family and rapidly extends our product offering into a
fast growing market sector. I have no doubt that our partnership
with Bombardier will boost sales and the value of this programme
tremendously, said Airbus Chief Executive Officer Tom Enders.
Not only will this partnership secure the C Series and its
industrial operations in Canada, the U.K. and China, but we also
bring new jobs to the U.S. Airbus will benefit from strengthening
its product portfolio in the high-volume single-aisle market,
offering superior value to our airline customers worldwide.
We are very pleased to welcome Airbus to the C Series
programme, said Alain Bellemare, President and Chief Executive
Officer of Bombardier Inc. Airbus is the perfect partner for us,
Québec and Canada. Their global scale, strong customer
relationships and operational expertise are key ingredients for
unleashing the full value of the C Series. This partnership should
more than double the value of the C Series programme and ensures
our remarkable game-changing aircraft realizes its full
Ownership Structure and
The C Series programme is operated by
CSALP in respect of which Bombardier and IQ respectively hold
approximately a 62% and a 38% interest. The Investment Agreement
contemplates Airbus acquiring a 50.01% interest in CSALP. Airbus
will enter into commercial agreements relating to (i) sales and
marketing support services for the C Series, (ii) management of
procurement, which will include leading negotiations to improve
CSALP level supplier agreements, and (iii) customer support.
closing, there will be no cash contribution by any of the
partners, nor will CSALP assume any financial debt. It also
contemplates that Bombardier will continue with its current
funding plan of CSALP and will fund, if required, the cash
shortfalls of CSALP during the first year following the closing up
to a maximum amount of US$350 million, and during the second and
third years following the closing up to a maximum aggregate amount
of US$350 million over both years, in consideration for non-voting
participating shares of CSALP with cumulative annual dividends of
2%, with any excess shortfall during such periods to be shared
proportionately amongst Class A shareholders.
benefit from call rights in respect of all of Bombardiers
interest in CSALP at fair market value, with the amount for
non- voting participating shares used by Bombardier capped at the
invested amount plus accrued but unpaid dividends, including a
call right exercisable no earlier than 7.5 years following the
closing, except in the event of certain changes in the control of
Bombardier, in which case the right is accelerated.
will benefit from a corresponding put right whereby it could
require that Airbus acquire its interest at fair market value
after the expiry of the same period. IQs interest is redeemable
at fair market value by CSALP, under certain conditions, starting
in 2023. IQ will also benefit from tag along rights in connection
with a sale by Bombardier of its interest in the partnership.
The Board of Directors of CSALP will initially consist of
seven directors, four of whom will be proposed by Airbus, two of
whom will be proposed by Bombardier, and one of whom will be
proposed by IQ. Airbus will be entitled to name the Chairman of
Subject to obtaining the required approval from the
Toronto Stock Exchange, the transaction also provides for the
issuance to Airbus, upon closing, of warrants exercisable to
acquire up to 100,000,000 Class B Shares (subordinate voting) of
Bombardier (representing approximately 5% of the aggregate issued
and outstanding Class A Shares (multiple voting) and Class B
Shares of Bombardier on a fully-diluted basis, and approximately
5% of the aggregate issued and outstanding Class A Shares and
Class B Shares on a non-diluted basis), at an exercise price per
share equal to the US$ equivalent of C$2.29, which represents the
volume-weighted average price of the Class B Shares over the five
trading days ending Friday, 13 October 2017. The warrants will
have a five-year term from the date of issue, will not be listed
and will provide for market standard adjustment provisions,
including in the event of corporate changes, stock splits,
non-cash dividends, distributions of rights, options or warrants
to all or substantially all shareholders or consolidations.
The issuance of the warrants and their terms were negotiated
between Bombardier and Airbus at arms length and will not
materially affect control of Bombardier. Security holder approval
will be required under Toronto Stock Exchange rules due to the
fact that the warrants will be issued later than 45 days from the
date upon which the exercise price was established. Such approval
is expected to be obtained by way of written consent of
shareholders holding more than 50% of the voting rights attached
to all of Bombardiers issued and outstanding shares.
transaction has been approved by the Boards of Directors of both
Airbus and Bombardier, as well as the Cabinet of the Government of
Québec. The transaction remains subject to regulatory approvals,
as well as other conditions usual in this type of transaction.
There are no guarantees that the transaction will be completed and
that the conditions to which it is subject would be met.
Completion of the transaction is currently expected for the second
half of 2018.
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