Bombardier Inc. said Monday it has won a $7.9-billion in contracts to provide rolling stock, signalling and project management to help upgrade London's aging underground system.
Later in the day, the transportation giant announced plans to sell 340 million Class B shares at $3.25 each, for a total of $1.105-billion. Last Thursday, the company unveiled a sweeping overhaul and said it hoped to raise $800-million through the public offer.
Meanwhile, the contracts with London's underground will run over 15 years and were awarded by Metronet, a private consortium taking over a large portion of the operation.
Under the agreement, Bombardier's transportation unit will supply project management as well as 1,738 metro cars and new signalling systems for the Victoria Line and Sub-Surface lines, together with maintenance of the rolling stock.
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The new metro car fleets will be built in Bombardier's facility in Derby between 2008 and 2015.
In addition to the supply contracts, Bombardier Transportation is also one of the five equal shareholders of Metronet Rail BCV Holdings Ltd. and Metronet Rail SSL Holdings Ltd.
Together, the shareholders have invested $812-million of equity under a complex financing transaction. In the first seven-and-a-half years of the 30-year public private partnership, Metronet will invest over $16.2-billion upgrading, replacing and maintaining the infrastructure of the Infracos BCV, which includes the Bakerloo, Victoria, Central and Waterloo & City Lines. The deal also includes the Infraco SSL, including the Sub-Surface Lines-Circle, District, Hammersmith & City, Metropolitan and East London.
"We will be working in partnership with the other Metronet shareholders to bring major improvements to travellers in London and to ensure a massive investment into the London Underground systems," Pierre Lortie, Bombardier Transportation's president and chief operating officer, said.
"The new trains will be built and maintained in the United Kingdom and will bring a secure and long term workload for our Derby site."
Monday's announcement has been long awaited with closing of the agreement delayed several times because of political squabbling in Britain as well as the complexity of the agreement.
It also comes after Bombardier Transportation's parent, Bombardier Inc., announced a massive overhaul last week, aimed partly at refocusing the company on its key transportation and aerospace operations, after posting a massive $1-billion loss in the fourth quarter.