Quebec open to foreign money in Bombardier

Quebec, Canada's largest province, has signaled it is open to foreign investment in Bombardier Inc after the Canadian plane and train manufacturer failed to sell its CSeries jet program to Airbus, potentially inviting a politically difficult deal with a Chinese investor.

The failed talks were the latest blow to Bombardier, which is saddled with debt as the CSeries program limps toward commercial service next year, years late and billions of dollars over budget, jeopardizing Bombardier's dream of entering the aviation big league on its own terms.

Asked about the possibility of foreign investment, Quebec's Economy Minister Jacques Daoust hinted that a majority stake held by overseas interests would not be unusual.

"Look at the ownership of Quebec crown jewels that are listed on the stock exchange," he said in Quebec City. "You are going to realize that they are not majority-held by Quebecers." Daoust said the most important issue for him was that the company's head office remained in Montreal.

Shares in Bombardier fell 13 percent on the Toronto Stock Exchange on Wednesday, a day after Bombardier and Airbus said talks between them had ended. Bombardier had offered to sell a majority stake in the CSeries to its larger rival.

"We think Bombardier approaching Airbus is negative as it could imply serious funding or CSeries sales issues," Canaccord analyst David Tyerman wrote in a note to clients. The company has been struggling to sell the narrow-body jet and has not announced a new firm order in more than a year.

Quebec is ready to help Bombardier, Daoust said, adding the company had not asked for financial help with the CSeries program.

Investissement Quebec, created by the province to provide financing for Quebec companies, loaned Bombardier C$117 million ($89.8 million) at market rates in 2009 for the CSeries program's development.

The province may lean on the public pension plan, Caisse de depot et placement, to support the planemaker. The Caisse declined to comment on "rumors" involving financing talks with Bombardier. A spokesman reiterated the pension fund's long-held stance that it "is independent and makes its own investment decisions".

Bombardier had already approached an unnamed Chinese company but those discussions ended three to four weeks ago, according to one source familiar with the situation.

"A deal with the Chinese seems to make the most sense, but that may be politically impractical," said Credit Suisse analyst Rob Spingarn.

A banking industry source said: "If they get the money from non-Westerners, that adds another level of complexity in terms of transfer of technology."