| The rescue of French Alstom remains in doubt The French engineering and energy giant Alstom SA, whose possible bankruptcy Europe is concerned about, may avoid a sad fate. Yesterday it became known that representatives of the concern managed to reach an agreement with the French government and banks on financial support. In total, it is estimated at 7 billion euros.
Half of this amount will be provided in cash, the rest, as Bloomberg reports, will be issued in the form of bank guarantees. At the same time, the French government, together with leading national banks, including BNP Paribas SA, Societe Generale SA and Credit Agricole SA, intends to purchase an additional issue of shares (the total placement amount is 600 million euros). Once all terms of the agreement are met, the government will become Alstom's largest shareholder. He will have 31.5% of the company's shares at his disposal (at a price of 1.25 euros per share). Alstom will also receive the loans needed to service its €4.9 billion debt. It is expected that Alstom management will also receive subordinated loans worth 1.3 billion euros, which will be used to repay bonds: one tranche is 550 million euros (February 2004), the other is 1.25 billion euros (April 2004 ).
Alstom has been experiencing serious financial difficulties for a long time. Over the past two years, the company has been losing money due to declining demand for its products and continuously rising capital expenditures. Since the first public offering in June 1998, they have lost almost 90% of their value. The company is now actively selling off part of its assets. Last week, one division was sold to Germany's Siemens for 1.1 billion euros. And in the near future, Alstom is going to part with some electricity assets (they were offered to Areva Corporation for 1.5 billion euros).
The situation with Alstom could not help but worry the French government. After all, the bankruptcy of a company that produces a fifth of the world's electricity puts almost 200 thousand people out of work. Earlier, the country's three largest banks appealed to the French Minister of Finance with a request to take measures to prevent a crisis. Otherwise, as noted in the bankers’ appeal, the country’s financial stability will be jeopardized and serious damage will be caused to the European Union as a whole. After this, the French government decided to begin actively purchasing shares of the company.
However, despite the efforts of the state and banks, the company’s rescue is still in question. The main problem is that the EU may regard the French government's actions as contrary to EU laws on providing state aid to private companies. A similar story happened with France Telecom. Now EU officials are checking the legitimacy of the French government's actions towards the telecommunications giant, which is going through hard times. Denis UVAROV |
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