MONTREAL — Quebec's pension fund manager is taking over a cement plant under construction from the family that controls Bombardier after the project's $1-billion budget was exceeded by more than $500 million.
Along with its own investment of $125 million in the plant, which is situated in the Gaspe region of the province, Caisse de depot et placements du Quebec said BlackRock Alternative Investors will also join the project through a $125-million debenture.
Together, the $250 million in new financing will be enough to complete the project, the Caisse said in a news release Thursday.
The new cement plant, with its modern facilities and equipment, is expected to benefit from lower operating costs and direct access to a marine terminal.
The Caisse noted that market conditions are improved from when the project was launched a few years ago. The institutional investor said there is substantially higher North American demand, a strong U.S. dollar and cement shortages — all while plants in Canada and the U.S. are operating at or near capacity.
"We believe that this project has high-quality fundamentals. For this reason, la Caisse has entered into a change-of-control agreement with Beaudier," said Caisse executive vice-president Christian Dube, referring to the investment company controlled by the Bombardier-Beaudoin family.
The Caisse will gain control of the McInnis Cement's board of directors.
Last week, the company announced management changes to strengthen and complete construction of the plant, including appointment of a new head of engineering, construction and operations. It is also seeking a new CEO.
McInnis Cement was formed by members of the family that founded Bombardier (TSX:BBD.B) and its spinoff, Ski-Doo maker BRP Inc. (TSX:DOO).
The project has received financial support from successive Parti Quebecois and Liberal provincial governments.
Former premier Pauline Marois agreed in 2014 to provide a guaranteed loan worth about $250 million. The province's investment arm invested $100 million as an equity partner while the Caisse previously invested $140 million.