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A Bombardier plant in Montreal on June 5, 2020.

Paul Chiasson/The Canadian Press

Bombardier Inc. has closed its deal to sell its transportation division for less than was expected - and said on Friday that it will fight the adjusted price paid by buyer, Alstom SA.

Bombardier said it will receive net proceeds of US$3.6-billion from the transaction, after adjustments and providing a cut to Caisse de dépôt et placement du Québec, which owns a chunk of the transportation division. In September, when Bombardier and Alstom signed a definitive agreement, the net proceeds were estimated at US$4-billion - and that was already smaller than a price in the range of US$4.2-billion to US$4.5-billion when the deal was first announced in February, 2020.

Bombardier, which now is solely a business-jet company, remains debt-laden, and the Alstom deal was seen as immensely important in shoring up its balance sheet.

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Earlier this month, before the newest numbers were revealed, analyst Seth M. Seifman of J.P. Morgan said the outlook for Bombardier “is very much about the capital structure and whatever we learn about it with [fourth-quarter] earnings,” which are scheduled for release on Feb 11. “Even after receiving the Alstom proceeds, we believe Bombardier is too levered to be a standalone business jet manufacturer.” Mr. Seifman has a hold rating on the shares.

Alstom CEO says ‘several years’ needed to fix Bombardier’s rail business, but no plans to shut Ontario, Quebec plants

In its announcement Friday, Bombardier said proceeds from the transaction were lower than previous estimates as a result of the transportation division’s “lower than expected cash generation in the fourth quarter due in part to unfavourable market conditions, as well as disagreements between the parties as to certain adjustments which Bombardier intends to challenge.”

In its statement, Alstom said there was a mechanism in the deal to adjust the purchase price based on the cash position of Bombardier Transportation as of Dec. 31, as well as “other further contractual adjustments.”

In response to questions from The Globe and Mail, Bombardier spokesman Olivier Marcil said the company will share more details as part of its earnings announcement next month.

“It was important for us to close the deal today as planned as a transaction like this requires significant commitment of resources and this will now allow us to be able to focus 100 per cent on business jets,” he said. “As mentioned in our press release, the parties disagree with certain adjustments and the sale agreement provides for mechanisms to address these issues. This is not unusual in [a mergers and acquisitions] deal of this magnitude.”

RBC Dominion Securities analyst Walter Spracklin said Bombardier’s disclosure on Friday that it had US$1.8-billion in cash at the end of 2020 is “a noticeable step down” from his US$2.15-billion forecast. “We see this potentially implying that the company will now not achieve its guidance of [free cash flow] breakeven” for the second half of 2020.

And, he said, it implied higher levels of net debt than he expected. Mr. Spacklin has a hold rating on the shares and a target price of 60 cents. The shares fell 13 per cent on Friday to close at 61 cents.

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