MONTREAL, Sept. 16 (Xinhua) -- Montreal-based Bombardier announced Wednesday that it has signed a definitive agreement for the sale of its rail unit to French train giant Alstom at a lowered price from a memorandum of understanding between the two companies earlier this year.
The price is 7.15 billion Euros (about 8.4 billion U.S. dollars) including debt, a downward adjustment of 300 million Euros (about 350 million U.S. dollars) from the original terms of the deal.
The lower price is offset to some extent by a more favorable exchange rate between European and U.S. currencies, the Canadian multinational said.
"Today's announcement marks a significant milestone towards achieving our near-term priorities and repositioning Bombardier," Bombardier President and Chief Executive Officer Eric Martel said in a statement. "The proceeds from this transaction will allow us to begin reshaping our capital structure and start addressing our balance sheet through debt paydown."
Bombardier now expects net proceeds of about 4 billion U.S. dollars from the sale, down from a range of 4.2-4.5 billion U.S. dollars. That amount includes 500 million Euros (about 585 million U.S. dollars) in Alstom stock.
The transaction is now expected to close in the first quarter of 2021, Bombardier said.
Bombardier is one of the world's largest manufacturers of rail equipment and continues to receive new orders, strengthening a backlog of 33.7 billion U.S. dollars. But Its business reportedly has been hamstrung in recent years by problems on contracts, including deals with Germany's Deutsche Bahn and London Overground, which have resulted in delivery delays and financial penalties.
The Canadian company took a charge of 435 million U.S. dollars on the train business in its latest quarter, which contributed to a net loss of 223 million U.S. dollars.