Bombadier announced its $2-3 billion CS100 deal knowing the deal is and remains unfunded

Bombadier Inc , a company listed on the Canadian Stock Exchange, presumably in the interest of keeping the market fully informed, announced on  17 March 2015:
Bombardier Commercial Aircraft and Fly Mojo Sdn Bhd announced today that the parties have signed a Letter of Intent (LOI) for the sale and purchase of 20 CS100 aircraft with options for an additional 20 CS100 aircraft.Based on the list price of the CS100 aircraft, a firm order would be valued at approximately $1.47 billion US, and could increase to $2.94 billion US, should flymojo exercise all its options.

Flymojo is , in relative terms, nothing more than a shell, with a paid-up capital of only USD 1.million, and nothing else. When asked about its funding for the deal the company first claimed to be backed by private equity, but then under interrogation said:
"flymojo is working alongside Bombardier and third parties to source potential financing solutions."
It appears then that Bombadier has made its announcement knowing that the deal is unfunded. It might as well have announced that it was buying Airbus and Boeing all at once. Bombadier and Flymojo initially gave the impression that Flymojo's private equity backers would fund the deal. However, when it was put to company spokeswoman Tan Wai Fun that the size of the deal would require an injection of capital that would in essence swamp the interest of existing shareholders to next to nothing, Ms Tan responded:

I checked, and noted my mistake in the response to the question on aircraft funding.
My apologies for that - the correct response is:
"flymojo is working alongside Bombardier and third parties to source potential financing solutions."
In fact,Ms Tan made no mistake. Managing director, Datuk Janardhanan Gopala Krishnan, told Malaysia's Sun Daily that the company is backed by private equity funds,"   and   "will look into sale and leaseback of aircraft of its fleet in a bid to keep the company asset light." 


It is clear from the differing accounts from the company's CEO and its spokeswoman that the deal is unfunded, and that Bombardier is aware of the fact. Announcing a deal of the given magnitude knowing it is yet to be funded, with a client that is little more than a shell, must cause Canadian regulators some concern.END 

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