UPDATE 5-Quebec pension fund to buy stake in Bombardier rail arm for $1.5 bln

* Caisse to buy 30 pct stake in rail unit
* Caisse to name three members to rail unit board

(Adds Caisse chief executive and analyst comments, updates
share price move)
By Allison Lampert and Euan Rocha
MONTREAL/TORONTO, Nov 19 (Reuters) - Quebec's public pension
fund manager will buy a 30 percent stake in Bombardier Inc's
BBDb.TO rail business for $1.5 billion in the troubled
company's latest bid to provide a bigger cash cushion for its
troubled planemaking unit.
The infusion from the Caisse de depot et placement du Quebec
(CDPQ) is the second financing deal Bombardier has struck in
recent weeks, as it makes a final push toward the launch of its
long-delayed CSeries jet program.
After the latest deal closes in the first quarter of 2016,
the unit that makes passenger railcars and locomotives will be
governed by a seven-member board, with three nominees being
named by Caisse, the companies said on Thursday. urn:newsml:reuters.com:*:nL1N12127G
The Caisse, which has had concerns in the past with the grip
the Bombardier-Beaudoin family have over the parent company with
their super-voting shares, also extracted some other commitments
as part of the deal, including assurances around the maintenance
of specific cash reserve levels. urn:newsml:reuters.com:*:nL1N13E1OD
"It's structured almost like a private equity investment, as
opposed to a pure long-term equity investment," said AltaCorp
analyst Chris Murray. "It has got protections in there that are
interesting."
The fund also won the right to vet new independent directors
named to the parent company's board, but in an interview Caisse
Chief Executive Michael Sabia said it would not aim for direct
board representation but rather push for qualified outsiders.
"What we want, and I think what Bombardier wants, are solid
directors with experience and a performance focus. They're going
to take that company forward, they are going to build a culture
that needs to be built," he said. "That's good for everybody."
The fund is also receiving 105.85 million warrants that are
convertible to the company's more widely held Class B shares and
would give it a further 4.5 percent equity stake in the parent.
"The deal is complex in structure and CDPQ has in our view,
exercised a large degree of caution in crafting the structure of
the deal," said Scotiabank analyst Turan Quettawala, in a note.
Shares in Bombardier closed flat at C$1.28 on the TSX on
Thursday.

SEEKING MORE HELP
Last month, the Quebec government agreed to put $1 billion
into the CSeries program for a nearly 50 percent stake in the
project. The narrow-body CSeries is set to begin service in
2016, but the program is years behind schedule and billions of
dollars over budget.
Despite the recent deals, Bombardier is still seeking more
help and is in talks with the Canadian federal government about
a further investment in the CSeries. urn:newsml:reuters.com:*:nL1N13B25E
"Bombardier will have sufficient cash resources to complete
the CSeries development and support losses during the ramp-up
production phase," National Bank analyst Cameron Doerksen said
in a note to clients.
On a conference call on Thursday, Bombardier's CEO Alain
Bellemare said the recent cash infusions will take the company's
liquidity to about $6.5 billion on a proforma basis at the end
of this year.
The Caisse deal puts an end in the near term to Bombardier's
alternative plan to list a part of the rail business in Europe.
urn:newsml:reuters.com:*:nL1N12127G urn:newsml:reuters.com:*:nL1N12G1ZQ
($1 = 1.3268 Canadian dollars)

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FACTBOX-Details on Caisse's investment in Bombardier rail
urn:newsml:reuters.com:*:nL1N13E1OD
BREAKINGVIEWS-Bombardier subsidies offer crucial but costly lift
urn:newsml:reuters.com:*:nL1N13E1A4
DBRS Comments on Bombardier Sale of Minority Stake in
Transportation Unit urn:newsml:reuters.com:*:nNrmbxCgJr
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