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Alstom rescue package agreed

01 Jun 2004

EUROPEAN Competition Commissioner Mario Monti confirmed on May 17 that he had 'the basis of an agreement' with French Finance Minister Nicolas Sarkozy on the refinancing and restructuring of Alstom, and that 'this should be finalised by the end of the week'.

Alstom's existing government guarantees backing €3·8bn of emergency bank finance arranged last year must be renegotiated by September (RG 11.03 p696), and the Commission's investigation into the restructuring is due to report this month. The French government is expected to take a 31·5% stake in Alstom through a debt-for-equity swap valued at €800m. Up to €1bn would be raised through a capital increase, with a core group of French banks expected to provide the remaining funds.

Monti and Sarkozy declined to provide details of their agreement, although a Finance Ministry spokesman confirmed that 'Alstom will not be dismantled ... we will keep the basic structure intact.'

Earlier plans had envisaged the company being broken up, with state-owned nuclear group Areva taking over Alstom Transport and Siemens buying the gas turbine and energy business - which would raise both state aid and competition issues. Around 10% of Alstom, accounting for annual revenues of €1·6bn, is expected to be sold off. This could include the railway signalling business unit.