Anxiety over for Bombardier Recreational Products

This represents "the best possible outcome" of the sale after a summer in which the division was "anxious for a conclusion," according to Roch Lambert, vice president and general manager, Boats and Outboard Engines Division.

Many in the boating industry predicted the sale of the division to the family, a topic widely discussed since Bombardier's intention to sell the division was announced in April.

The price tag on the recreational products division, which includes the Johnson and Evinrude outboard engine assembly plant in Wisconsin and the Sea-Doo jet boat plant in Illinois, is $1.225 billion (Canadian), an amount equivalent to $874.1 million in U.S. currency.

The $1.225 billion (Canadian) price is at the high-end of the range predicted by Canadian stock market analysts, who forecasted the deal would be done for $1 billion to $1.3 billion (Canadian).

Closure of the deal is expected by mid-fall and is subject to "certain purchase price adjustments, execution of definitive acquisition and financing documentation and to the approval of all required governmental authorities and to other consents and other usual conditions," according to Bombardier's statement.

Three groups to share ownership

Through the agreement, the Bombardier family will hold 35 percent of the new corporation, while Bain Capital will hold 50 percent and Caisse de depot et placement du Quebec will hold the remaining 15 percent.

The Bombardier family includes the corporation's current chairman, Laurent Beaudoin, and his son, Pierre, who headed the recreational products division during the late 1990s and now is the head of Bombardier Aerospace.

The decision to sell to the Bombardier family was made by an independent committee. Members of the family abstained from participating in board meetings when the transaction was considered and did not vote on whether to approve of the deal.

Details of the family's financing package were not immediately available. There are market analysts in Canada who believed the family would need to borrow too heavily in order to pay for the recreational products division, which would place a financial burden on its operations under the family's ownership.

Division reports loss for the quarter

Bombardier also reported today that the recreational products division reported a $2.8 million (Canadian) operating loss during the three months ended July 31, which compares with an operating profit of $24.7 million (Canadian) earned during the May-through-July portion of 2002.

The loss was incurred due to "the timing of recognition of sales concessions under a newly adopted accounting principle and a different product mix," according to Bombardier.

The recreational products division's sales revenue also declined 2 percent to $492.1 million (Canadian), from $500.4 million (Canadian) a year earlier.

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.

Dealers feel Bombardier deal is

OAK PARK, Ill. – Dealers, particularly those handling Johnson and Evinrude outboard engines and Sea-Doo jet boats, feel the sale of Bombardier Inc.'s Recreational Products Division to an investor group including the Bombardier family will be "wonderful," according to Phil Keeter, president of the Marine Retailers Association of America (MRAA).

The $875.3 million (U.S.) transaction was announced Wednesday (Aug. 27) and Keeter based his opinion upon conversations he had with MRAA members on Wednesday.

National Marine Marine Manufacturers Association (NMMA) President Thom Dammrich also said, "It is good for the industry now that we know the result."

Montreal-based Bombardier put its recreational products division up for sale in April so it could raise cash to support its business jet and regional passenger aircraft operations, which have suffered due to the airline industry's deep recession since the Sept. 11, 2001, terrorist attacks, said Paul Tellier, Bombardier's president and chief executive officer, during news conferences on Wednesday.

The recreational products division, which also includes the Sea-Doo personal watercraft (PWC) and Ski-Doo snowmobile businesses "has a bright future," Tellier said.

Tellier declined to identify the competing bidders for the recreational products division, although he said the second-highest bid was for $1 billion (Canadian), which is equivalent to $715 million in U.S. currency.

A new name for the recreational products business will be an item for discussion between the apparent buyers and Bombardier Inc., which will retain its name, Tellier said.

Among the members of the Bombardier family involved in buying the recreational products division acquisition are Laurent Beaudoin, Bombardier Inc.'s chairman and his son, Pierre Beaudoin, president of Bombardier Aerospace. Pierre Beaudoin was president of the recreational products division from 1996 to 2001 and served a term as NMMA chairman due to his involvement with the Sea-Doo PWC business.

Pierre Beaudoin will remain as the head of Bombarider Aerospace, Tellier added Wednesday.

Keeter said the dealer body has a high opinion of the Bombardier/Beaudoin families because of the stability they brought to the Johnson and Evinrude brands, and the product improvements they made since buying the business from the Bankruptcy Court that handled the Outboard Marine Corp. (OMC) liquidation during 2000.

Keeter added that the dealer body believes Roch Lambert, who manages the Johnson and Evinrude business in southeastern Wisconsin, had done an excellent job.

Source:www.boating-industry.com