Bombardier Inc. has signed a deal to sell its Downsview aircraft assembly plant in Toronto for US$635 million (Cdn$816 million) to the Public Sector Pension Investment Board.
Under a lease agreement, Bombardier will continue to operate from Downsview assembly site for up to three years following the closing of the deal, with two optional one-year extension periods. Bombardier announced that it has also signed an agreement with the Greater Toronto Airports Authority for a long-term lease of a property at Pearson International Airport where it plans a new final assembly plant for its global business jets.
The company made the announcements as it reported its latest financial results. The Downsview transaction is expected to close in the second quarter of this year, increasing cash by more than US$550 million after costs, Bombardier said in a statement Thursday.
The land sale buoys chief executive officer Alain Bellemare’s goal of fortifying Bombardier’s balance sheet, which is saddled with about $9 billion of debt from pricey development programs for the C Series airliner and the Global 7000 series business jet. Bombardier raised $638.4 million in a share offering in March, taking advantage of this year’s biggest stock gain among Canadian industrial companies.
Selling Downsview and moving to Pearson Airport will “allow us to monetize an underutilized asset, further streamline and optimize our business aircraft operations, and will support further economic development and job growth in the Greater Toronto area,” Bellemare said in the statement.
Bombardier said this past January that it had begun reviewing options for Downsview because the company uses only about 10% of the 375-acre site and bears the entire cost of operating a 7,000-foot long runway.
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