So the latest proposal being floated by Quebec is to take the CSeries off Bombardier's books, creating a new Joint Venture majority controlled by the Federal and Quebec governments (66%) while Bombardier would retain a minority interest (33%).
This is a "sweetheart" deal for Bombardier's founding family and a very bad deal for taxpayers:
- The Bombardier founding family will retain control of the parent company, with no change to the dual-class structure
- Taking the CSeries "off the books" allows Bombardier to "move" the program costs and cash burn to the JV, artificially boosting the parent company's near-term financials
- The deal overvalues the current worth of the CSeries program. The total government bailout will exceed Bombardier's entire market cap, yet they are only getting 66% of the CSeries
- Having 66% of the shares, the Federal + Quebec governments will now shoulder the majority of the risks associated with the CSeries
- But conversely, if/when the CSeries hits the breakeven point, Bombardier could simply buy-back the shares
Make no mistake, this entire deal is structured on the Bombardier/Beaudoin family retaining control of the parent company while offloading the CSeries cash burn and risks to the government.
So why is the Quebec (+ Trudeau) governments keep protecting the Bombardier family interests? What about the interests of Bombardier's other shareholders, employees and of the taxpayers?