A French government plan to renationalise part of the troubled Alstom engineering group met with fierce scepticism from Brussels yesterday and a suggestion that France was steamrolling established European competition rules in a vain attempt to save the once-proud maker of high-speed trains from bankruptcy.
Competition officials at the European Union are furious that the first they knew about the government's role in "the biggest debt restructuring effort in French industrial history" was when they read it in Les Echos, a French financial newspaper yesterday.
Tilman Lueder, spokesman for competition commissioner Mario Monti, said the French finance minister, Francis Mer, had only contacted Brussels yesterday morning to outline briefly what had already appeared in the French media. Mr Lueder said that, as far as he could tell from the sketchy information contained in the telephone call from Paris, the French plan "'merits more examination".
It emerged that a crisis meeting at the weekend of 70 investors in Alstom had ended with a warning from the country's three largest banks - BNP Paribas, Société Générale and Crédit Agricole-Crédit Lyonnais, which each have in excess of €1bn at stake - that the French and European financial systems would be at risk if the engineering company went bankrupt. Mr Lueder said the competition commissioner was now waiting for a "rapid and substantial explanation" from the French government of the 30 per cent bail-out plan.
He said: "They have to notify us of all state intervention. We will only be satisfied if we are convinced that the subscription the state proposes to make in the company is of a similar scale as might have come from a private investor."
The company, which makes the London Underground trains and is building the Queen Mary II, employs 110,000 people worldwide - 8,000 of them in Britain. It has debts of about €5bn(£3.5bn) and must repay in the order of €2bnearly next year. Shares in Alstom, which have lost 90 per cent of their value in two years, were suspended from trading on Monday ahead of an expected announcement yesterday of a largely private-sector salvage package.
The package as outlined comes on the back of a considerable round of asset-selling and job cuts by Alstom's chief executive, Patrick Kron. The company has raised about €1.5bn by selling an industrial turbines business to its main European rival, German group Siemens.
Last month, Alstom warned that it planned to wind down train manufacturing at its Washwood Heath plant in the West Midlands, a move British unions say could threaten 2,000 to 3,000 jobs.
Unions say the company has already cut about 8,000 jobs in the UK over the past five years. Alstom's 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.
The interventionist plan flies in the face of rhetoric from President Jacques Chirac's government that the days of state-nannying are over. Alstom, which yesterday refused to comment on the reports of the French government-brokered rescue plan, said it would make a formal announcement outlining the suggested rescue today .Reuse content