Newspaper article The Canadian Press

Bombardier Shares Get Lift from Rumoured Aid from Quebec Government

Newspaper article The Canadian Press

Bombardier Shares Get Lift from Rumoured Aid from Quebec Government

Article excerpt

Quebec set to invest in Bombardier: report

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MONTREAL - Hopes for a government bailout prompted a surge in Bombardier shares on Wednesday ahead of what is expected to be gloomy third-quarter results.

The Quebec government declined to confirm published reports suggesting that it will announce Thursday a financial contribution to bolster the embattled transportation giant's strained cash levels.

Several media reports, all citing sources, didn't specify whether the province or Quebec's biggest pension fund manager, the Caisse de depot, would buy Bombardier shares or make some other form of financial contribution.

The Quebec-based company's stock (TSX:BBD.B) gained strength on the Toronto Stock Exchange as the trading day progressed -- closing up 11 per cent in heavy trading -- but still worth far less than a year ago.

Government ministers declined to comment on the reports. But Quebec's two main opposition party leaders welcomed an expected government contribution -- either through an equity investment or convertible debt. Bombardier employs nearly 18,000 people in the province, contributes to exports and bolsters innovation.

Speculation of a possible joint venture to complete development of the CSeries comes as the Toronto Transit Commission board decided at a meeting Wednesday to sue Bombardier over late delivery of streetcars.

Bombardier spokesman Marc Laforge said the company had expected the lawsuit given the comments from TTC officials.

"Obviously not all the delays in this project have been caused by Bombardier and we will discuss this with our customer in due time," he said in an interview.

Bombardier's stock cratered in August to a low of $1.03 after hitting a 52-week high of $4.43 in early December. On Wednesday, the B shares closed at $1.61 with 18.7 million shares trading, more than double normal daily activity.

Earlier, Analyst Benoit Poirier of Desjardins Capital Markets said he doubts the province will make an equity investment in Bombardier Inc., given the 62 per cent drop in the company's stock price this year.

Poirier says he suspects the province could help Bombardier by investing $1 billion to $2 billion in Bombardier Transportation to avoid a planned IPO to sell a minority stake in the rail division, or by providing favourable financing to customers that buy Bombardier Aerospace CSeries planes. …

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