A class action for damages against Bombardier has been authorized by the Superior Court of Quebec, alleging “false and misleading” statements as well as breaches of the company’s obligation to provide occasional information regarding its 2018 forecasts.
The request for authorization of class action against Bombardier, its general director at the time Alain Bellemare and its chief financial officer, John Di Bert, was filed on February 14, 2019.
Bombardier said Monday that it intends to “vigorously defend” itself against the lawsuit against former executives, and that the company and the defendants deny any wrongdoing. She said she is weighing her options, including the possibility of an appeal.
Filed in the Superior Court of Quebec by shareholder Denis Gauthier, the class action concerns investors who purchased shares in the company between August 2 and November 8, 2018.
In the months preceding November 8, the Montreal company said it was on track to achieve the financial objectives linked to its restructuring.
But in its third-quarter results from November 2018, Bombardier announced it would cut 5,000 jobs and sell two units, and reported free cash flow “well below” breakeven expectations without relying on proceeds from a recent factory sale, according to an analyst at the time.
Shares of Bombardier, which has since reinvented itself as a business jet maker, fell 23% that day in November 2018.
The lawsuit highlights a “180-degree turn” in management reports between August 2 and November 8, regarding proceeds from the sale of Downsview, which caused the value of Bombardier shares to fall.
The class action alleges that the drop in value of Bombardier’s securities caused significant damage to the representative of the group as well as to the members and is a “direct consequence of the false and misleading statements as well as the breaches of the obligation to provide information Defendants’ decision regarding the 2018 Directive.
“The Court has not yet considered and ruled on the merits of the allegations and Bombardier is currently reviewing the authorization decision and evaluating its options, including the possibility of an appeal,” Bombardier said in a press release on Monday.