Quebec prepared to bail out Bombardier, minister says

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Quebec's economy minister said the province stands ready to provide financial assistance to Montreal plane and train maker Bombardier Inc. if its balance sheet deteriorates.

"We have money available to finance Bombardier customers. If Bombardier needs that money for its liquidity, we can work with them on that," Jacques Daoust told reporters outside the Liberal caucus in Quebec City Wednesday.

An aide to the minister said the province has not received any specific request for assistance and therefore the government "doesn't know what [the company's] needs are."

Bombardier faces a period of nearly unprecedented challenge as it seeks to finish tests on its new C Series commercial airliner and bring the new Global 7000-8000 corporate jets to market amid dwindling cash reserves.

The company last week said it would scrap its dividend, raise $600-million in new equity and up to $1.5-billion in long-term debt as it seeks to shore up its balance sheet and win back investor confidence. In a power shift that saw the company's controlling Bombardier-Beaudoin family loosen their grip over the manufacturer, Pierre Beaudoin relinquished his chief executive command to outsider Alain Bellemare. Mr. Beaudoin has taken the role of executive chairman.

Quebec won't abandon Bombardier, Mr. Daoust said, according to Argent. The company is too important to the province's economy, he said.

"Obviously if Bombardier called us, we would meet with them," the minister was quoted as saying. "If there was a public offering of securities, we have tools to help them. We will do it so that Bombardier succeeds."

Bombardier had available liquidity of $3.8-billion as of the end of December, including $2.4-billion in cash. Debt including its pension liability is approaching $10-billion, according to BMO Nesbitt Burns Inc. The company expects to burn through $2-billion in capital expenditure for its aerospace business alone this year.

Bombardier now estimates costs to develop the C Series at $5.4-billion, about 30 per cent more than its latest projection last year.

There is a Canadian precedent for governments helping manufacturers financially when thousands of direct and supplier jobs are at stake. In 2009, the federal and Ontario governments helped General Motors and Chrysler with roughly $14-billion (U.S.) in aid as the car makers worked through bankruptcy revamps.

The U.S. government, which also provided aid, later estimated it lost $11.2-billion on its roughly $50-billion bailout of GM.