All Bombardier preferred shares are perpetual, non-voting, cumulative and redeemable at the Corporation's option.
An unlimited number of preferred shares, without nominal or par value, are issuable in series, of which the following series have been authorized:
| | # authorized | Issued and outstanding |
| Series 2 preferred shares | 12,000,000 | 9,464,920 |
| Series 3 preferred shares | 12,000,000 | 2,535,080 |
| Series 4 preferred shares | 9,400,000 | 9,400,000 |
Features of these preferred shares are listed below.
Series 2 preferred shares
Redemption features:
Series 2 preferred shares are redeemable at Bombardier's option at $25.00 CAN per share on August 1, 2002, or at $25.50 CAN per share thereafter.
Conversion features:
Series 2 preferred shares were convertible on a one-for-one basis at the option of the holder on August 1, 2007 and are convertible on August 1 of every fifth year thereafter into Series 3 preferred shares. Fourteen days preceding a conversion date, if the number of Series 2 preferred shares outstanding is less than 1,000,000 shares, they will automatically be converted into an equal number of Series 3 preferred shares.
Dividends:
As of September 15, 2002, dividends are payable monthly, if declared, with the annual floating dividend rate on Series 2 preferred shares equal to 80 per cent of the Canadian prime rate for the first payment. The dividend rate will float in relation to changes in the prime rate and will be adjusted upwards or downwards on a monthly basis to a monthly maximum fluctuation of 4 per cent if the trading price of the Series 2 preferred shares is less than $24.90 CAN per share or more than $25.10 CAN per share. The annual dividend rate applicable in a month will always be between 50 per cent of prime and prime.
The dividend amount on the Series 2 preferred shares is obtained by multiplying the par value of the shares ($25.00 CAN) by the determined percentage rate (i.e. 80 per cent), multiplied by the prime rate on the specific month (i.e. 4.5 per cent), which results in a yearly dividend. This amount is then divided by 12 to get the monthly dividend.
For example, in September 2002, the prime rate was 4.5 per cent. Therefore, the dividend amount paid for this specific month was $0.075 CAN ($25.00 CAN multiplied by 80 per cent of 4.5 per cent, resulting in a yearly dividend of $0.90 CAN, which is then divided by 12).
In October 2002, the prime rate was 4.5 per cent. Because the share price was below $24.90 CAN, the percentage of prime paid increased by 4 per cent to 84 per cent and the dividend amount paid for this specific month was $0.07875 CAN ($25.00 CAN multiplied by 84 per cent of 4.5 per cent, which is then divided by 12).
For more information on Series 2 preferred shares, please see the prospectus.
Series 3 preferred shares
Redemption features:
Series 3 preferred shares are redeemable at Bombardier's option at $25.00 CAN per share on August 1, 2007, and on August 1 of every fifth year thereafter.
Conversion features:
Series 3 preferred shares were convertible on a one-for-one basis at the option of the holder on August 1, 2007, and are convertible on August 1 of every fifth year thereafter into Series 2 preferred shares. If the Corporation determines that, fourteen days preceding a conversion date, there would be less than 1,000,000 outstanding Series 2 preferred shares, then no Series 3 preferred shares may be converted.
Dividends:
As of October 31, 2002, dividends are payable quarterly, if declared. As of August 1, 2007, the annual dividend rate on the Series 3 preferred shares is 5.267% or $1.317 CAN per annum ($0.3292 CAN per quarter) for a five-year period. Each five-year fixed dividend rate selected by the Corporation shall not be less than 80 per cent of the Government of Canada bond yield as specified in the Series 2 preferred shares prospectus.
For more information on Series 3 preferred shares, please see the prospectus.
Series 4 preferred shares
Redemption features:
Series 4 preferred shares are redeemable at the Corporation's option at a per share price determined by the redemption date. Please see the table below:
| Redemption date | Price per share |
| March 31, 2007 – March 30, 2008 | $26.00 CAN |
| March 31, 2008 – March 30, 2009 | $25.75 CAN |
| March 31, 2009 – March 30, 2010 | $25.50 CAN |
| March 31, 2010 – March 30, 2011 | $25.25 CAN |
| On or after March 31, 2011 | $25.00 CAN |
Bombardier shall provide between 30 and 60 days notice of such redemption to each holder of the Series 4 preferred shares to be redeemed. If less than all outstanding Series 4 preferred shares are to be redeemed at any time, the Corporation will have sole discretion for determining the mode of selection for the shares to be redeemed.
Conversion features into Class B shares:
Since March 31, 2007, Bombardier may, on notice of between 30 and 60 days, and subject to stock exchange approvals, convert all or any of the Series 4 preferred shares into Class B shares.
The number of Class B shares into which each Series 4 preferred share may be so converted will be determined by dividing the then applicable redemption price per Series 4 preferred share, together with all accrued and unpaid dividends up to but excluding the date of conversion, by the greater of $2.00 CAN and 95 per cent of the weighted average trading price of the Class B shares on the TSX for the period of 20 consecutive trading days ending the fourth day prior to the date specified for the conversion or, if that fourth day is not a trading day, on the trading day immediately preceding the fourth day. If less than all of the outstanding Series 4 preferred shares are at any time to be converted, the shares to be converted will be selected by lot or in another equitable manner that the Corporation may determine.
For example: Assume you have one Series 4 preferred share, the redemption price of which is $26.00 CAN and the weighted average trading price of Class B shares is $11.45 CAN. 95 per cent of $11.45 CAN is $10.8775 CAN, which is greater than $2.00 CAN; thus, dividing $26.00 CAN by $10.8775 CAN, you would obtain 2.39026 shares at the conversion date. Since fractions of shares are not available, the outcome would result in two Class B shares and the remainder (0.39026 shares) paid in cash.
Dividends:
As of April 30, 2002, dividends, if declared, are payable quarterly and in cash with an annual dividend rate of 6.25 per cent ($1.5625 CAN per year or $0.390625 CAN per quarter) on Series 4 preferred shares.
For more information on Series 4 preferred shares, please see the prospectus.
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