Bombardier has finalized the term of the sale of its rail business to France-based Alstom, in a deal that will see the European trainmaker pay $350 million less that initially expected.
The revised deal values the enterprise at $8.4 billion, but Bombardier will get about $4 billion for the business because Alstom is assuming a lot of the unit’s debt, and Quebec’s pension fund — the Caisse de dépôt et placement du Québec — will get $2.2 billion from its stake in the company.
Bombardier says it will use the cash to pay down some of its remaining $9.3 billion debt load.
“Today’s announcement marks a significant milestone towards achieving our near-term priorities and repositioning Bombardier as a pure-play business jet company,” Bombardier CEO Eric Martel said. “The proceeds from this transaction will allow us to begin reshaping our capital structure and start addressing our balance sheet through debt paydown, so that we can achieve the full potential of our incredibly talented employees and our industry leading business jet portfolio
In its most recent financial results, Alstom noted financial challenges at the rail business it was seeking to acquire, but said believes it can restore the unit’s profitability in the medium-term.