Bombardier Inc.: Is Québec’s Pension Plan About to Buy a Boatload of Shares?

Reuters is reporting that Bombardier Inc. (TSX:BBD.B) is negotiating with the Caisse de dépôt et placement du Québec about a cash infusion. How will this play out?

| More on:
The Motley Fool

It’s no secret that Bombardier Inc. (TSX:BBD.B) needs more money. The company has US$3 billion of cash on its balance sheet (as of June 30th), but that is after burning US$1.6 billion through the first six months of this year.

So, Bombardier needs to do something to raise more funds. And according to Reuters, this may come sooner rather than later.

A familiar source

Reuters is reporting that, according to anonymous sources, Bombardier is in discussions with the Caisse de dépôt et placement du Québec about a deal to inject more cash into the company.

This shouldn’t surprise anyone. Caisse is already one of Bombardier’s largest shareholders, and the pension fund has a mandate to protect the best interests of Québec. Earlier this year, Québec’s economy minister said the province would help Bombardier if the company needed it. One unnamed analyst thought this was code for a cash infusion from Caisse.

What remains unclear is the structure of such a deal. But it’s unlikely that it would be mainly composed of debt—Bombardier already has US$9 billion of debt on its balance sheet. So, it’s much more likely that Caisse’s ownership in the company would increase, perhaps very significantly.

It’s also unclear whether or not Bombardier will have to abandon its ownership structure, one that gives family insiders majority control of the company. We know that Caisse has asked for this in the past, and that Bombardier has little leverage in these negotiations. Only time will tell.

What does this mean for Bombardier’s stock price?

If Caisse secures greater ownership of Bombardier, you shouldn’t expect investors to like it. After all, Bombardier’s stock tanked the last time it decided to raise more money back in January.

Investors may be more forgiving if Bombardier is forced to abandon its ownership structure. After all, Bombardier’s shareholders have been frustrated for decades by the company’s mismanagement, and would surely welcome greater control.

But there could be a nasty side effect to a change in ownership structure: greater influence from the province of Québec. Remember, the government’s number one priority is serving the people of Québec, not Bombardier’s shareholders. So, if the province gains too much influence, then Bombardier’s prospects may be hurt in the long run.

Other options are available

This is by no means a done deal. Other sources have indicated that Bombardier is looking at other financing options, including the sale or joint venturing of certain business units. These kinds of moves would be much more welcome than a sale of stock to Caisse.

So, there are a lot of different things that Bombardier can do in the short term, and the company reports third-quarter earnings at the end of October. It’s still too risky to buy the shares, but this is a company you should certainly keep an eye on.

Should you invest $1,000 in Spin Master right now?

Before you buy stock in Spin Master, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Spin Master wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

clock time
Bank Stocks

1 Magnificent Financial Stock Down 23% to Buy and Hold Forever

This top TSX financial stock is trading well below its recent peak, but its long-term fundamentals remain rock solid.

Read more »

dividend growth for passive income
Bank Stocks

This Canadian Bank Pays 4.75% and Could Double Your Money by 2030

A Canadian bank is a top pick for its lucrative dividend and potential to double your money in five years.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How I’d Invest $7,000 in My TFSA for $660 in Tax-Free Annual Income

Canadians looking for ways to make the most of the new TFSA contribution room should consider investing in these two…

Read more »

oil and natural gas
Energy Stocks

1 Magnificent Canadian Energy Stock Down 23% to Buy and Hold for Decades

This oil and gas producer has increased its dividend annually for more than two decades.

Read more »

Silhouette of bull in front of setting sun
Investing

Where I’d Invest $2,500 in the TSX Today

Given their solid underlying businesses and healthy growth prospects, I am bullish on these TSX stocks.

Read more »

path road success business
Dividend Stocks

How to Invest $50,000 of Tax-Free Cash as Canada-US Trade Uncertainty Escalates

Few Canadian stocks are as easy a choice as this one, making it perfect during volatile periods.

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

This Dividend King Paying 7.5% in Monthly Income Is a Must-Have

This high-yield TSX stock might not be a textbook Dividend King, but its reliable monthly payouts and improving financials make…

Read more »

monthly desk calendar
Dividend Stocks

How I’d Generate $200 in Monthly Income With a $7,000 Investment

Want to establish $200 in monthly income (or even more?) Here's an easy way to start today that will provide…

Read more »