The French finance minister, Francis Mer, said yesterday he was "confident of reaching agreement with Brussels" over his government's move to in effect renationalise part of the Alstom engineering and transport group to save it from bankruptcy.
As Alstom outlined the bail-out plan - which gives the French government a 31.5 per cent stake in the group and two seats on the board - yesterday morning, it became clear that French and foreign creditor banks in effect had no choice but to accept the proposal. Forty banks between them have €15bn at stake in Alstom.
M. Mer said he did not expect the go-ahead from the Competition Commission before the proposed €600m capital increase later this year - €300m of which will come from the French taxpayer and treasury - but "it is likely we will agree on a formula that allows the operation".
The €2.8bn rescue plan for Alstom also includes a refundable bond issue worth €900m and new loans amounting to €1.3bn. The banks will also be asked to invest in a debt-for-equity swap worth €1bn. Alstom's chairman, Patrick Kron, said that in the light of the bank's stake in the company, a capital injection by the state of €300m "looks relatively modest".
As the Bourse reacted cautiously to the plan, Didier Orand, an analyst with Fideuram Wargny, said: "We were faced with a potential cascade of bankruptcies - all the subcontractors, the banking system, and tens of thousands of jobs at stake."
Alstom employs 110,000 people worldwide, three-quarters of them in France and other industrialised countries. Due to the jobs at stake, the full political spectrum in France and all the trade unions backed the plan after its launch yesterday.
The Socialist party first secretary, Francois Hollande, said the bail-out engineered by the right-wing French government was "legitimate" but that it should have been accompanied by a "coherent" and long-term programme of orders from state-run companies.Reuse content