January 22, 1992
ONTARIO AND BOMBARDIER PURCHASE DE HAVILLAND
TORONTO -- Ontario Premier Bob Rae and Industry Minister Ed Philip today announced Ontario's participation in a deal to purchase de Havilland from Seattle-based Boeing Commercial Airplane Group.
According to the terms of the agreement, the province will take a 49 per cent equity position in partnership with Bombardier in a new holding company that will own de Havilland. Bombardier will hold 51 per cent.
De Havilland's assets will be acquired by the new owners in return for the assumption of liabilities together with a cash adjustment to reflect the actual value of assets and liabilities at closing.
"This agreement, which involves the participation of Boeing, the CAW, and the federal government, comes as the result of a series of complex negotiations that have taken place over the past year," said Premier Rae. "After the European Commission ruled against a takeover by Aerospatiale, Ontario sought an industry equity partner and approached Bombardier. We negotiated a joint government assistance package with Ottawa, and through Bombardier concluded a purchase agreement with Boeing. It's a credit to the determination of all parties involved that this deal is now a reality."
Ontario's share of the $100 million initial capitalization of the new company will be $49 million. The province will provide additional research and development and restructuring support to de Havilland over the next three years. In total, $200 million will be available to revitalize the company's core DASH-8 business and provide the basis for the company's future growth.
Ontario will also share equally with Ottawa in flowing $120 million for research and development and capital investment under the Federal Defense Industries Productivity Program (DIPP). Further DIPP support will be provided in future years. Ontario's total non-equity support over the five years will be $300 million.
"I'm delighted that this agreement will invigorate a vital industry right here in Ontario," said Industry Minister Philip. "De Havilland is a key player in Ontario's aerospace industry. This deal not only ensures that de Havilland continues to be a major employer, it also allows the company to act as a catalyst for ongoing development of an innovative, internationally competitive aerospace industry in this province."
A systems integrator such as de Havilland is instrumental in the location choice and growth of supplier firms, which in turn invest heavily in research and development, and introduce and disseminate advanced technology.
"Through this joint venture with Bombardier, Ontario gains a partner with the demonstrated ability to manage an aircraft manufacturing operation in a commercially successful manner. Our equity position will guarantee that the future direction of de Havilland supports our basic objective - the survival of the company as a Canadian-owned world-class integrated aircraft designer and manufacturer," said Philip.
The aerospace industry makes an important contribution to the Ontario economy in terms of employment, research and development, exports and advanced technology. It represents the type of industry that Ontario hopes to foster.
"This agreement is good for the province and good for the highly skilled workers who continue to develop first class products for a global market. It underscores our government's commitment to creating high-tech jobs in Ontario," Philip added.
De Havilland, with its Dash 8 series, is a world leader in development and manufacturing regional turboprop aircraft.
Deputy Minister's Office