Bombardier CEO meets investors as stock dives 20 percent

MONTREAL, TORONTO (Reuters) – Bombardier Inc’s (BBDb.TO) top executives met with investors in Montreal on Friday after a disappointing free cash flow forecast and regulatory action, which sent the plane and train maker’s shares down 20 percent, sources familiar with the matter said.

The Montreal meeting with Bombardier Chief Executive Alain Bellemare and Chief Financial Officer John Di Bert was previously scheduled but “the (high) participation and level of interest was driven by recent events,” said one of the two sources.

Bellemare had already met with investors following the free cash flow forecast on Nov. 8, which sent its shares down more than 23 percent on that day.

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The Canadian company said it would only be able to meet its 2018 free cash flow estimate by using $635 million in proceeds from the sale of a Toronto plant earlier this year. Analysts had expected Montreal-based Bombardier to achieve its target of roughly breaking even on cash without relying on those proceeds.

Bellemare, credited with improving Bombardier’s finances after a crippling 2015 cash crunch, sought to reassure investors that the company would still achieve the company’s five-year turnaround plan designed to boost revenues and margins by 2020, said the source who could not provide further details on the meeting.

The sources declined to be identified as the information is not public. A Bombardier spokesman declined to comment when asked about the meeting.

On Thursday, the province of Quebec’s securities watchdog asked Bombardier to halt stock trades under a plan set up to facilitate share sales by certain senior company executives.

The Autorité des marchés financiers (AMF) said it was “reviewing” transactions and “various announcements” related to Bombardier’s creation of an Automatic Securities Disposition Plan on Aug. 15.

Bombardier stock closed down 20 percent at C$1.67, adding to last week’s 31 percent slide.

The sell-off in the stock also spread to bonds. Bombardier has about C$12.3 billion ($9.35 billion) of bonds outstanding, much of which has been issued in U.S. dollars, according to Refinitiv Eikon data.

The yield on Bombardier’s 7.5 percent U.S. dollar bond maturing in March 2025 has jumped by nearly 300 basis points over the last two weeks to 9.87 percent, its highest since July 2016.

Jamie Koutaoukis, Moody’s lead Bombardier analyst, said by email that she downgraded the company’s senior unsecured debt in 2017 “highlighting at that time that we expected continued negative free cash flow in 2018, in contrast to guidance.”

With new CEO, Telecom Italia ‘opera’ edges towards finale

MILAN (Reuters) – Barely a year into the job as the boss of Italy’s biggest telecoms company, Amos Genish had just finished celebrating a joint venture with electronics group Samsung at a dinner in South Korea when a WhatsApp message arrived sealing his fate.

The Telecom Italia CEO had been in conflict with some of his fellow board members over strategy at the former state phone monopoly but the company had said there would be no board meeting while he was away.

“Amos, the board has been called for tomorrow morning at 7 to resolve on the revocation of your delegation of power. I’m sorry it happened when you’re out,” read the message, a copy of which has been viewed by Reuters.

Twelve hours later, the telecoms industry veteran was fired in a board meeting he dialled into from Seoul. He was the third CEO to leave the group in as many years and his successor was chosen on Sunday.

The new CEO, Luigi Gubitosi, is backed by U.S. activist investor Elliott Management, which had pushed for the spin off of the company’s fixed line network (NetCo) and the sale of other assets, shifting the focus from the operational turnaround pursued by Genish.

The sacking, which Genish called a Soviet-style putsch, was the latest twist in a corporate drama that one board member described in an email as an “opera”.

In theory, it paves the way for Elliott’s plan. But conversations with sources both inside and close to the company show that in practice there may be many more twists to come.

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The underlying plot pits Elliott against TIM’s main shareholder, French media group Vivendi, over how to revive an underperforming business whose shares have dropped 27 percent this year alone.

The outcome will decide both the future of TIM and whether Italy can overcome the digital divide that separates it from more advanced economies in Europe.

Genish, who was appointed by the French investor last year, wants TIM to keep control of the network, deeming it strategic both to the deployment of fifth-generation (5G) mobile services and to the survival of the company’s service operations.

Elliott, which took control of the board in May, has an ally in Italy’s anti-establishment government elected in June, which has prioritized the creation of a single broadband network to help Italy catch up digitally with European peers.

A new draft amendment to a government fiscal decree, seen by Reuters on Friday, aims to advance the project via incentives to twin TIM’s network with small, state-backed rival, Open Fiber.

“All the stars are aligned, this is a massive project and it needs to be pursued, you can’t say you won’t do it because there are risks associated with it,” a source familiar with the matter said of Genish.

Exclusive: U.S. shale firms offer $100 million to aid Texas, New Mexico

HOUSTON (Reuters) – More than a dozen top U.S. energy companies have pledged $100 million toward easing stresses on health care, education and civic infrastructure from the shale oil and gas boom in West Texas and New Mexico, the group said on Sunday.

Chevron, EOG Resources, Exxon Mobil and Royal Dutch Shell are among 17 companies backing the Permian Strategic Partnership, as the consortium is called, Don Evans, a former U.S. government official and energy executive helping launch the group, told Reuters on Saturday.

The group seeks to address labor and housing shortages, overtaxed health care and traffic congestion caused in part by companies descending on the Permian Basin, the nation’s largest oilfield, where they hope to pump billions of dollars’ worth of oil and gas in coming decades, experts said.

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“It’s a significant amount of money, but these are huge challenges,” said Evans, a former U.S. Secretary of Commerce who lives in Midland, Texas, the epicenter of the shale oil revolution. “We don’t have enough teachers. We don’t have enough doctors.”

The group aims to work with regional and federal officials, companies, nonprofit groups and educators in New Mexico and Texas, said Evans, who started in the Permian and became CEO of producer Tom Brown Inc before joining the administration of former President George W. Bush.

The group is assembling plans to hold meetings in communities across the region, so “everyone have a voice” in the undertaking. There is no timetable or plan for how the initial contribution will be spent. The group is recruiting staff and searching for office space, he said.

In the last decade, the region’s many pockets of oil and low production costs have led to gold rush-like conditions in the Permian. Companies are pouring staff and equipment into the oilfield, which is expected to pump 3.7 million barrels of oil per day by December, four times its rate in 2010, according to the U.S. Energy Information Administration.

That boom has local employers, including restaurants and school systems, under pressure from staff leaving for oilfield jobs. Midland’s unemployment rate was 2.1 percent in October, compared to the nation’s 3.7 percent rate.

The last decade’s shale boom also has led to school overcrowding, soaring traffic fatalities, drug abuse and strains on the power grid because of the activity.

“Our roads are not designed to handle the amount of truck traffic we have,” said Jeff Walker, transportation training coordinator at New Mexico Junior College in Hobbs.

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Drug charges in Midland more than doubled between 2012 and 2016, to 942 from 491, according to police data. Traffic accidents also jumped 18 percent between 2016 and 2017 in Midland County, and 29 percent in nearby Ector County, according to Texas Department of Transportation data.

“They all agree that scaling up infrastructure is going to be a huge challenge,” said Bob Peterson, a partner at consultancy Arthur D. Little who advises producers. “There’s a common agreement that there’s a whole bundle of problems.”