Posts: 1125
Joined: Fri Feb 20, 2004 5:09 am

New Embraer Capital Structure

Sat Jan 21, 2006 3:53 am


Huge news for Embraer and corporate governance practices in Brazil!!

Embraer is converting all its preference shares [PN] for 1 share/1 vote common shares [ON] and listing itself on the electronic Novo Mercado in Sao Paulo. PN's currently listed on the New York Stock Exchange [NYSE] under the trading ticker, "ERJ", will be converted to ON's, giving all shareholders identical political rights. The Brazilian government will retain its "golden share" in the company, giving it veto rights over any strategic transaction involving a change in corporate control.

This move has HUGE implications for corporate governance in Brazil, as it creates incentives for other corporations to follow suit and increase their trading liquidity and transparency. Embraer will now have much greater trading liquidity in its shares and have access to larger pools of investment capital.

Embraer's investor relations department will release its presentation detailing the move this evening. You can read the Reuters article describing today's announcement:


Bombardier should follow suit and drop its ridiculous A/B-share SV/MV capital structure that gives the Beaudoin and Bombardier families control over corporate governance. BBD's shares have been a disaster for investors.
Posts: 2955
Joined: Wed Feb 09, 2005 1:49 am

RE: New Embraer Capital Structure

Sat Jan 21, 2006 12:42 pm

Bombardier has a real problem. It is not updating its current products nor developing new ones. Its shot at the 110-135 seat market is bound to be overshadowed by expectation that Boeing and Airbus will launch new narrow bodies. Modifying their capital structure, though still positive, is unlikely to bring their airliner business back from the brink.
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