Alstom wins a breather with rescue rights issue
By Paul Betts
August 13 2004
Even if it was not the full €2.2bn ($2.7bn) hoped for, the French government was understandably relieved yesterday that its struggling engineering champion Alstom managed to raise €1.75bn from its rescue rights issue. So was the stock market, sending Alstom shares 10 per cent higher. However, this merely lifted them 3 cents from Wednesday's all-time low of 32 cents.
The capital increase, approved after much huffing and puffing in Brussels, gives the state a 21.4 per cent stake in the company, which the government intends to keep at least until 2008 to oversee the group's recovery.
It might well be forced to hang around for longer if it continues to refuse to break up the group's shipbuilding, railway and power generation equipment businesses, and perhaps will be encouraged by the turnround of Alstom's former partner ABB in neighbouring Switzerland.
But ABB's problems stemmed essentially from huge asbestos-related liabilities; Alstom's from the financial and competitive plight of its industrial operations.
To be fair, the company has started cleaning up its industrial act. But its high-speed trains are low margin, its big power turbines are only now recovering from costly technical problems and its shipyards suffer from terminal decline.
The government toyed with merging Alstom with Areva. The cash-rich state nuclear champion resisted by arguing that this would torpedo its planned privatisation. The idea of foisting the shipyard on some new pan-European shipbuilding group is making little progress.
Siemens is interested in Alstom's trains and turbines but the company considers any deal with the Germans worse than death. It may have to reconsider - if it wants to keep the undertaker at bay. |
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