Quebec Inc.’s new reality

Whether it’s PKP coming clean on offshore tax havens or Rona’s inevitable takeover by Lowe’s, the myth once known as Québec Inc. is being debunked by market realities.

Take Bombardier, once the jewel in Quebec’s treasury of entrepreneurial successes. On Friday, shares closed at 80 cents after falling 8% on news the Trudeau Liberals are prepared to finance the struggling aircraft builder on the condition that the Bombardier-Beaudoin family agrees to a modification of its shareholder agreement.

It would end the family’s ability to control the firm without majority ownership by means of a class of shares conferring multiple votes.

Such a demand never would have been possible in the days of Jean Chrétien but times and allegiances have changed, so it falls to the family to decide whether they’ll risk everything by refusing or diluting their control by accepting Ottawa’s terms for a bailout loan.

On the one hand, the Couillard government set the precedent for an unconditional financial rescue last year. The Quebec Liberals came under withering criticism, especially in light of the Caisse de dépôt’s demands in taking an equity position in Bombardier Rail.

 

On the other hand, we’re beginning to see daylight for Bombardier’s CSeries single-corridor passenger jets, what with emerging markets looking to acquire new fleets. It would be a pity for Bombardier to collapse on that threshold.

One hopes the family will recognize this as an offer they can’t refuse. The old rules of governance are being replaced. One doesn’t need to see the writing on the wall to get that.

 

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