Bombardier noteholders organize, hire advisors ahead of consent solicitation deadline

An ad hoc group of Bombardier noteholders has retained Evercore as a financial advisor, as the aircraft manufacturer pursues a consent solicitation process to clear it from a potential default, according to three sources familiar with the situation. The consortium has also tapped Milbank for legal representation, two of the sources added.

The committee held an informational call on Thursday (6 May), the first two sources continued. The group represents more than a majority of the USD 2bn 7.875% senior unsecured notes due 2027 and over 40% of the USD 1bn 7.5% senior unsecured notes due 2024, one of the sources said. 

On 22 April, Bombardier received a letter from a holder of its 2034 notes, claiming that the company’s divestitures of non-core assets, including its transportation business, regional jet program and aerostructures division, constitute a breach of covenants under the bond’s indenture. In response, Bombardier launched consent solicitations on 3 May for its outstanding senior notes maturing between 2022 and 2034. 

Under the process, the aircraft manufacturer seeks noteholder approval to clarify that the transactions are permitted under the indentures and, to avoid doubt, to waive any default that could have arisen as a result of the divestitures.

“The corporation believes that these allegations are without merit and that the corporation has not breached any covenant under the indenture,” Bombardier said in a statement last week. 

In exchange for requisite support, Bombardier will pay a 12.5bps consent fee. The deadline for holders to agree is 11 May by 5pm ET. 

Bombardier’s USD 2bn 7.875% senior unsecured notes due 2027 last traded today at 101.938 to yield 7.126%, up from trades at par to yield 7.872% on 30 April, according to MarketAxess.

Evercore and Milbank declined to comment. Bombardier did not respond to a request for comment.

2021 Debtwire

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