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J. Armand Bombardier, 52, designer of the Bombardier snowmobile, stands beside the latest model on the production line of his Valcourt, Quebec, factory, 60 miles east of Montreal.

Canadian Press

Bombardier Inc.'s founding family now has more of its wealth tied to legacy snowmobile company BRP Inc. than to the global plane and train manufacturer, a curious situation caused by Bombardier's spectacular stock collapse this year.

The family of eight individuals, including executive chairman Pierre Beaudoin, his uncle J.R. André Bombardier and aunt Janine Bombardier, have seen their controlling stake in Bombardier Inc. shrink to about $478-million on the back of a 62-per-cent decline in the stock since Jan. 1. That's half the value of the family's roughly $1-billion position in BRP.

The stock's plunge highlights the pressure on the family, as well as Bombardier's board and senior management, who may be facing renewed calls by strategic investors to change the company's ownership structure in exchange for equity financing. Bombardier had access to $4.4-billion (U.S.) in short-term capital as of June 30 and the manufacturer isn't believed to be in any serious cash crunch. But analysts believe it needs more money to push past initial production of its new C Series jet and develop the new Global 7000/8000 business aircraft.

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"Families at their best take a long-term, patient view of what's going on with their businesses and can hang in there despite what critics say," said Karl Moore, a corporate leadership and strategy specialist at McGill University. "But sometimes it doesn't work out. Canada and the U.S. are littered with firms whose [founding families] didn't let go."

Montreal-based Bombardier, the world's only maker of both planes and trains, is exploring a range of options to cut its $9-billion debt and put the company on more solid footing. The manufacturer has confirmed it held talks with Airbus Group SE and has also explored a tie-up with German train maker Siemens AG, according to a person familiar with the matter.

As heirs to company founder Joseph-Armand Bombardier, who invented the snowmobile, members of the Beaudoin-Bombardier family control Bombardier through a special class of stock that carries 10 votes a share. The arrangement, which gives the family 53.4 per cent of the voting rights, has long been criticized for perpetuating bad management and failing to deliver acceptable returns for shareholders.

Supporters of the system say it has provided long-term stability to a company that develops long-term plane and train programs. The family continues to oppose efforts to diminish its control, said two people with knowledge of the matter.

"Probably the biggest strategic issue facing the company right now is control" through those supervoting shares, said Rolland Vincent, a former Bombardier executive who now runs a consultancy in Plano, Tex. "It's almost the last line of defence."

Mehran Ebrahimi, a professor at the Université du Québec a Montréal who leads a research group in aerospace company management, said he doesn't see the family relinquishing control of Bombardier at such a sensitive time. Doing so as its market value barely tops $3-billion would be an invitation for an acquirer to come in and break up the company, he said. He argues that would be a disaster for Quebec's export-driven economy.

"Today, the only obstacle in the way of that type of speculative transaction taking place for Bombardier is the Beaudoin family" and its multivoting control, Mr. Ebrahimi said. "Is this ownership situation a healthy thing that should last until the end of time? I'd say no. But it does serve today as a kind of protection against a hostile offer."

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Through its Beaudier Inc. investment firm, the Beaudoin-Bombardier family also controls McInnis Cement, promoter of a $1.1-billion cement plant production project in Quebec's Gaspé Peninsula. With pension fund Caisse de dépôt et placement du Québec and the Quebec government invested as partners, McInnis expects to make its first deliveries in the fall of 2016.

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