Bombardier is not done battling disaffected lenders who claim they have been hurt by the numerous asset sales the Quebec plane maker has made as part of its recovery. The case can be called to Investor Day scheduled for Thursday.
Millions of dollars are at stake in this legal dispute. Bombardier was recently dismissed by a New York court as part of its efforts to file a complaint against it in February 2022 by Antara Capital Master Fund and Corbin Opportunity Fund. However, these two creditors were cut out of business, as some of their applications were refused. However, they have 30 days to return the fee.
“We are pleased to be able to continue proceedings in this litigation,” Duane Luft, who is representing the plaintiffs, said in an email sent Monday.
The dispute concerns several transactions – Bombardier Transportation, C Series, CRJs and airframes – that Bombardier has undertaken in recent years to straighten its finances and refocus on business aviation.
By acting in this way, the Quebec multinational corporation violated the terms of the trust deed of a $250 million bond bond issued in 2004 that matures in 2034, plaintiffs claim. They claim that this law stipulates that a multinational corporation should not sell or otherwise dispose of “all or substantially all of its business or assets”. Quite the opposite happened.
Disgruntled lenders say the private jet maker should have redeemed the bonds before they matured, in addition to paying the remaining interest. They estimate that the amount was around 400 million US dollars. Prosecutors allege Bombardier gagged them, and got over the problem by issuing a new tranche of debt.
This scheme allowed the company to gain enough support to amend the terms of the trust deed and put an end to the plaintiffs’ onslaught.
According to New York Supreme Court Justice Andrew Boruck, the Antara Capital Master Fund and Corbin Opportunity Fund never waived their right to assert that the Quebec aircraft manufacturer was in default.
Bombardier has tried to gag us by getting the approval of new bondholders who have no right to consent [aux modifications demandées par l’entreprise]m confirms.H the attic. We are glad the court rejected the company’s bid. »
In their complaint filed last year, plaintiffs demanded unspecified amounts from Bombardier for breach of contract as well as damages in an amount to be determined later at the end of the trial.
For its part, the business jet manufacturer sees the glass half full by asserting that the plaintiffs will have to amend their application. And this testifies, as the company believes, to the weakness of the complaint.
“Bombardier firmly believes that the lawsuit itself is without merit and will continue to defend itself,” the company said in a statement.
The company will take stock of its recovery on Thursday, marking its annual investor day. Analysts expect the company to raise its financial targets for the year as it recovers faster than expected. Last week, the company bought back half a billion tranches of debt due in 2025.
“This is another positive step in the debt reduction strategy,” analyst Chris Murray at ATB Capital said in a note. This further reduces the interest burden, which decreased by 330 million annually compared to 2020.
On the Toronto Stock Exchange Monday afternoon, Bombardier stock was trading at $56.73, down $3.14, or 5.3%.
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- 5.9 billion US dollars
- Bombardier’s long-term debt as of December 31, 2022.
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