By Allison Lampert
MONTREAL, Feb 3 (Reuters) - Canadian plane and train maker
Bombardier Inc BBDb.TO , whose stock has hit its lowest level
in 25 years, will soon announce plans for a reverse stock split,
two sources familiar with the matter said, in order to remain a
part of Canada's benchmark stock index.
The sources, who are not authorized to publicly discuss the
plans, said Bombardier's board of directors had already approved
the plan before the stock dipped below C$1 last week.
A Bombardier spokeswoman said the company does not comment
on its share price or its stock in general.
Bombardier stock has declined more than 33 percent year to
date, trading at 89 Canadian cents in Toronto on Wednesday, as
it has struggled to find buyers for its new 100-150 seat CSeries
passenger jet.
If the shares stay at these levels, the stock could get
ejected from Canada's benchmark S&P/TSX composite index
.GSPTSE , forcing index funds to sell the stock and putting
more downward pressure on the share price.
To be a component of the index, a stock must have a
volume-weighted average price of C$1 over the three months prior
to the quarterly review. The next quarterly review is due at the
end of February, and will cover the period from December through
February.
A share consolidation, which would allow Bombardier to
regain compliance with index rules, is expected to be announced
when the company reports fourth-quarter results on Feb. 17, said
one of the sources.
A reverse stock split would not change the value of the
company. The sources could not say how many old shares would
equal a new share.
Bombardier had 2.23 billion shares outstanding, as of
October 2015.
The CSeries jet faces fierce competition from rival plane
makers Boeing (N:BA) Co BA.N and Airbus Group SE AIR.PA . The
smaller of the two CSeries planes, the CS100, which received
certification in December from Transport Canada, is to enter
service in 2016 after years of delays and billions of dollars in
cost overruns.
Broader concerns about the aerospace market have also hit
shares of Bombardier rivals. Boeing's stock has declined more
than 17 percent since the start of the year, while Airbus shares
have dropped more than 13 percent.
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GRAPHIC-Bombardier's share price vs peers, industry http://link.reuters.com/ryt75w
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