(Bloomberg) -- Bombardier Inc. has hired Toronto-Dominion Bank to find a buyer for the Downsview aircraft-assembly plant in Toronto that could fetch more than C$500 million ($382 million), according to people familiar with the matter.
Canada’s biggest aerospace company has received multiple bids, with residential developers in the mix, said the people who asked not to be identified because the matter isn’t public. Housing development would increase the value of the land, though builders may face opposition from the union and lawmakers looking to preserve the land for industry.
A sale would further Bombardier Chief Executive Officer Alain Bellemare’s five-year turnaround plan, which includes bolstering the balance sheet. The Montreal-based company is saddled with about $9.2 billion of debt after investing in research and development of new aircraft and is stepping up efforts to raise cash with the goal of breaking even on a cash-flow basis this year.
Bombardier plans to move its Toronto-area manufacturing activities from Downsview to a site that would provide access to a runway without the costs associated with staffing a fire department or a control tower, according to one of the people. Toronto Pearson International Airport is being considered as an alternative site.
Bombardier spokesman Simon Letendre said that the company’s priority is to “extract value from this land” and that it would be up to the buyer to apply for a zoning change. Lynsey Wynberg, a TD Securities spokeswoman, declined to comment.
It may be a lucrative time to sell the 1.5 square-kilometer (375 acre) site that Bombardier has owned since purchasing Boeing Co.’s de Havilland unit in 1992. The facility, which is about 13 kilometers (8 miles) northwest of downtown, assembles turboprop planes and business jets. Bombardier has said it uses only about 10 percent of the property and bears the cost of operating a 2,100-meter (7,000-foot) runway.
Bombardier hopes to complete a deal involving Downsview “relatively quickly in 2018,’’ Bellemare said last month. He didn’t elaborate on possible financial terms. Downsview is “an amazing piece of land,’’ he said on a conference call with analysts. “It’s an underutilized asset. We can do the same type of work somewhere else and really unlock huge value.”
Residential developers will need re-zoning permission from government officials as the site is designated for “employment” uses only. These efforts may run into opposition, including from the union at the plant, which is lobbying government officials to reject any requests for re-zoning to allow residential development.
Bombardier fell 0.5 percent to C$3.70 at 11:27 a.m. in Toronto.
Toronto city councilor Maria Augimeri, who represents the district that includes Downsview, said the site is held in an agreement between Bombardier and the city and provincial governments and isn’t permitted to be re-zoned for residential development.
The sale of the site is “obviously a concern” said Michael Levitt, a Liberal member of parliament whose constituency includes Downsview. “This is economic employment lands and it’s important for Toronto that it stays as employment lands -- there’s 3,500 jobs there,” he said by phone.
Bombardier hasn’t requested a zoning change, Augimeri confirmed by email on Monday. “They just want to sell and get out,” she said. “Any re-zoning would take many many years if ever.”
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