MONTREAL, Quebec, Canada -- Bombardier Inc. has signed a sale and purchase agreement for its recreational products segment with Bombardier Recreational Products Inc., a corporation formed by Bain Capital, members of the Bombardier family and the Caisse de depot et placement du Quebec, it reported in a statement today.
The purchase price has been reduced by C$115 to C$960 million, according to Bombardier, of which C$910 million will be paid in cash and C$50 million will be paid by the issuance of preferred shares of the purchaser's parent company.
The net purchase price has been reduced primarily due to the continued appreciation of the Canadian dollar relative to the U.S. dollar, which adversely affects the value of the recreational products business, the company reported.
As is customary for such transactions, cash proceeds will be impacted at closing by adjustments for variation in working capital, pension plan funding and other off balance sheet items. These are currently estimated to be in the range of C$160 million in favor of the purchaser, according to Bombardier.
Transaction expected to close this year
The transaction is expected to close during the current fiscal year and is subject to the completion of the purchaser's committed financing, obtaining the consent of governmental authorities and fulfillment of other customary conditions.
In connection with the sale, the corporation and the purchaser will enter into certain other agreements, including a trademark license agreement under which Bombardier will license to the purchaser certain trademarks which will continue to be owned by Bombardier, according to the company.
In addition, certain floor plan and other financing arrangements will be entered into by the purchaser with Bombardier Capital, Bombardier reported.
Third quarter results reported
In a separate statement today, Bombardier Inc. reported its third quarter financial results, including discontinued operations, which consist of Bombardier Recreational Products.
Income for the division totaled C$12.4 million for the third quarter of the current fiscal year, compared to restated income of $51.5 million for the same period last year, according to Bombardier. Income from discontinued operations totaled C$8.2 million for the nine months ended Oct. 31, 2003, compared to restated income of C$55.8 million for the nine months ended Oct. 31, 2002. These decreases in income are mainly attributable to a different product mix and lower sales of parts and accessories, Bombardier reported.
Discontinued operations generated revenues of C$732 million for the three-month period ended Oct. 31, 2003, compared to C$722.4 million for the same period last year and revenues amounted to C$1.7 billion for each of the nine-month periods, ended Oct. 31, 2003 and Oct. 31, 2002.
Bombardier Recreational Products designs, develops, builds, distributes and markets Sea-Doo watercraft and sport boats, Ski-Doo and Lynx snowmobiles, Johnson and Evinrude outboard engines, Evinrude direct injection and Evinrude E-TEC technologies, Bombardier ATVs, Rotax engines and karts, as well as utility vehicles.