Bombardier Rec. Products sale possible this Summer

The “short list of finalists” in the competition to buy the Bombardier Recreational Products Division was expected to be compiled by “early June” and the winner might be announced as soon as “mid-summer,” according to Roch Lambert, vice president and general manager of the Canadian company’s Boats and Outboard Engines Division.
Once the winning bidder is announced, most likely, it will take “a few weeks or a
few months past that” to finalize the deal, Lambert added.
Of course, marine industry interests are closely following the developments because the division includes the Johnson and Evinrude brands of outboard engines, which have been manufactured by Bombardier in Sturtevant, Wisc., since 2001.
The division also includes the Sea-Doo sport boats manufacturing plant in Benton, Ill., along with Sea-Doo personal watercraft and Ski-Doo snowmobile assembly operations in Quebec, Canada.
Unlike the situation in the year 2000, prior to the bankruptcy filing by Outboard Marine Corp., former manufacturer of the Johnson and Evinrude brands, the Bombardier Recreational Products Division was profitable through the 12-month period that ended last June 31, according to parent company Bombardier Inc.
The division reported operating earnings of C$138.4 million on sales of C$2.48 billion for the 12 months ended Jan. 31. (As of late May, one Canadian dollar was worth 72 cents in
U.S. currency.)
During the three months ended April 30, the division lost C$1.4 million, but that was the result of a change in accounting methods related to end-of-season discounts on Sea-Doo snowmobiles, said Paul Tellier, Bombardier’s president and CEO.
Without the change in accounting methods — which resulted in recognizing all of the expenses related to the snowmobile discounts during the February-through-April period, instead of spreading them out over the company’s entire fiscal year — then the division would have earned around C$18 million, about the same amount it earned during the February-through-April portion of 2002, Tellier said.
Bombardier anticipates getting about 20 offers for its recreational products division, Tellier added, during a Webcast on May 27.
The company’s aerospace revenue totaled C$11.29 billion during the 12 months ended Jan. 31, and its rail transportation revenue amounted to C$9.42 billion during that period. However, Bombardier’s aerospace operations have struggled since Sept. 11, 2001, reporting an operating loss of C$32.4 million during the 12 months ended Jan. 31, so the recreational products division was put up for sale to raise cash to allow the parent company to endure the aerospace industry’s current difficulties.
Among the companies believed to be interested in Bombardier Recreational Products are motorcycle manufacturer Harley-Davidson Inc. and heavy equipment manufacturer Deere & Co. However, potential bidders have signed confidentiality agreements and spokesmen
for Harley-Davidson and Deere & Co. declined to comment.
Meanwhile, heirs to company founder Joseph-Armand Bombardier said they would be interested in “participating in a bid with other investors” to buy the recreational products division. The heirs include Bombardier Inc. Chairman Laurent Beaudoin, the founder’s son in-law, and Beaudoin’s son, Pierre, currently the president of Bombardier Aerospace.
However, the Bombardier family’s bid will not get preferential treatment, Tellier said.
Because Bombardier is a public company, with its shares traded on the Toronto, Brussels and Frankfurt stock exchanges, it is required to sell the division to the bidder that will provide the greatest return to investors, Tellier said.
Despite the uncertainty, Lambert said it’s “business as usual” at Bombardier Recreational Products operations, although he warned representatives from competing manufacturers about spreading false rumors and he added, “We’ve alerted our legal department.”
In one issue of “The Real Deal”, the weekly publication produced by the division for employees and customers, Lambert wrote that he heard reports about representatives
of “Y,” apparently Yamaha, and “M,” apparently Mercury, spreading rumors that Bombardier would stop honoring warranty claims. Lambert wrote in the publication that those rumors are untrue.
Lambert also circulated a letter from
dealer floorplan lender Transamerica Distribution Finance in which Transa-
merica Senior Vice President Richard Strickler wrote, “Transamerica Distribution Finance Corp. is working with the Bombardier Boats and Outboard Engines Division very closely through the transition, and will continue to support Johnson and Evinrude products throughout the sale process.
“We recognize the value of the brands. We are confident the brands will thrive under the new ownership.
“Transamerica staff has already begun
the process of putting together the floorplan programs for the ’04 model year and are assuming a ‘business as usual’ posture. As soon as a buyer is announced, we will work to continue floorplan financing under the new ownership.”
Lambert said the 2004 model year Evinrude and Johnson outboards were to be
introduced during June.