Alstom close to agreement on new financing

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The Independent Online

Shares in the French engineering company Alstom were suspended from trading on the stock market yesterday as it said it was in "advanced negotiations" to shore up its balance sheet.

The company, which employs about 8,000 workers in the UK, has about €5bn (£3.5bn) of debt and must repay in the order of €2bn early next year.

Alstom's chief executive, Patrick Kron, has already unveiled plans to cut costs, including slashing jobs, and sell assets in an effort to raise cash in the face of slowing demand.

But the company admitted that it was now in talks to "ensure its financial requirements to strengthen its balance sheet, refinance its short and medium-term debt, ensure its liquidity needs and get adequate bonding facilities".

The company makes trains, including those on London Underground, cruise ships and power generation systems.

It has been hit, however, by slowing demand. Orders in the three months to 30 June slumped by 22 per cent while sales fell by 9 per cent compared to the same period a year before.

Alstom, which would not comment further yesterday, plans to issue another update this morning following a board meeting. Analysts believe several options, ranging from renegotiating its existing facilities through to a debt-for-equity swap, will be considered.

Only last month, Alstom warned that it planned to wind down train manufacturing at its Washwood Heath plant in the West Midlands - a move, the unions estimate, that could threaten 2,000 to 3,000 jobs.

Alstom's largest plants in the UK are at Washwood Heath, Rugby and Lincoln. Unions say the company has already cut about 8,000 jobs in the UK over the past five years.

A spokesman for the Amicus union said: "When they first bought GEC Alstom ... we said at the time that they were doing it in order to buy the market share of the company and to run it down because it was cheap and easy for them to do it. That's exactly what they're doing. They're not making any redundancies in France."

Alstom has, so far, raised about €1.5bn by selling off businesses including an industrial turbines business which was sold to Germany's Siemens for €1.1bn.

It said last week that it was in talks with Areva, France's state-controlled nuclear power plant maker, about selling it its power transmission and distribution business.