Published on : Friday, June 24, 2016
Bombardier strongly disagrees with Moody’s analysis and decision regarding the senior unsecured rating change from B2 to B3. In making this change, Moody’s fails to recognize and fully value the significant progress the company has made in the past year to improve its risk profile, as reflected in their Corporate Family rating outlook upgrade from negative to stable.
Today’s senior unsecured rating change is based on the structure of the $1.5 billion investment by Caisse de dépôt et placement du Québec (CDPQ) announced last November, rather than any new transaction or event.
Over the last six months, Bombardier has solidified its liquidity position with $2.5 billion raised through the CDPQ investment and the Québec Government agreement, which was signed this morning. These investments have significantly improved the company’s creditworthiness and have better positioned Bombardier to execute its five-year turnaround plan and become cash flow breakeven in 2018. This progress was recognized by Moody’s in their November 19, 2015 report, which discussed the CDPQ investment structure and stated that the investment was another “shot in the arm for Bombardier” and concluded that a rating change was not warranted.
When the investment was announced, the company fully disclosed the terms of the CDPQ agreement, including the convertible share structure that is behind today’s rating change. Since then, Bombardier’s notes have outperformed the market, reflecting our stronger liquidity position, and the significant progress we’ve made de-risking the company with securing the C Series aircraft’s position in the market through the Delta and Air Canada announcements.
We are confident that our noteholders and investors recognize the progress we’ve made over the past year and view the CDPQ and Québec investments positively. As a result of these investments, Bombardier is better positioned to execute on its turn-around plan, delivering future earnings growth and cash flow generation.