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By: Moderatore on Sabato 20 Settembre 2003 23:03
Alstom/Unions/Source-rench Govt To Choose Cash Or Shrs
A source close to the deal said the French government had proposed to contribute to the bailout by buying securities convertible into shares or cash.
The source added that the state would choose between cash or shares only after the end of the E.C. investigation, which is expected to last about six months.
The total value of the bailout was likely to be around EUR3.2 billion, the source said.
He added that the 32 banks still had to submit the deal to their credit committees, which means approval isn't assured.
A spokesperson for the French Ministry of Finance declined to comment on the details of the bailout. But he said the government is still "working and is mobilized" on Alstom's rescue and is in contact with the E.C. on the matter.
Blanche, Alstom's union coordinator, added that no guarantees had been given to unions regarding employment. Unions were told this matter would be discussed from Tuesday, if an agreement regarding the bailout is reached.
-By Greg Keller and Benoit Faucon, Dow Jones Newswires;
=DJ ALSTOM RESCUE STYMIED BY LACK OF CORE STAKEHOLDING
By Greg Keller
PARIS (Dow Jones)--Ever since Alstom SA (ALS) admitted the true gravity of its financial crisis earlier this year, investors, lenders, customers and employees have been wondering when the crippled high-speed train maker will finally hit the buffers.
Meanwhile, frantic, last-minute talks to avert bankruptcy were continuing Friday ahead of Monday's deadline.
A source participating in the talks said Alstom's diffuse base of equity and debt holders was a sticking point.
There's no single stakeholder with an interest large enough to warrant making the sacrifices necessary to save the company, he said. It was the "Gordian knot" stymieing all attempts to find a solution.
The French government has warned that Alstom is on the brink of bankruptcy after the European Union earlier this week blocked a EUR7 billion rescue package. Mounting debt and shrinking order books have sent Alstom into what some are calling a "death spiral" unless the French state intervenes.
All, especially politicians, are agreed it's in no one's interest for Alstom to go out of business. French Finance Minister Francis Mer, who said Friday he ould skip the Group of Seven meeting of finance ministers in Dubai and Mario Monti, himself forgoing a trip home to Italy, will try to square this circle
before Monday.
Citing antitrust concerns, the E.U. head office gave France until then to crap the bailout of Alstom, which also makes power plants and luxury cruiseliners, or face legal action.
Monti and E.U. Commission President Romano Prodi were authorized by the full 20-member Commission to start legal action against the French aidpackage, worth EUR7.0 billion, unless Paris delays the subsidies.
"The problem is that Alstom is owned by U.S. pension funds. There's no single big shareholder who can take charge," the source said.
"Alstom also doesn't have a small group of lenders. If there were only four big banks, there could be an agreement. But there are over 30 banks, and if even the smallest backs out, it unleashes a chain reaction."
Shareholders Irrelevant
Indeed, Alstom's fractured capital base has been largely in the hands of institutional investors ever since its founding shareholders, Alcatel (ALA) and Marconi, finished disposing of their stakes in mid 2001.
As of June, foreign and French institutional investors held a combined 79% of the company's shares, retail investors owned 21% and employees 1.5%.
But compared with the its bondholders, Alstom's equity investors have been close to irrelevant in the rescue plan.
By the end of March, Alstom carried unrated debt of EUR4.5 billion and ff-balance-sheet liabilities exceeding EUR10 billion, with net shareholder equity of just EUR348 million.
While the banks are keeping their individual exposures to Alstom's debt to themselves, analysts estimate it at around EUR1 billion each for the three most exposed French banks, Societe Generale (F.SGF), BNP Paribas (F.BNP) and Credit Agricole (F.CRA).
That leaves around 60% of the total debt in the hands of the other lenders.
One banking analyst estimates that between 60% and 70% of Alstom's total debt is held by French banks, which still leaves up to 40% widely dispersed among 25 foreign banks.
"You go talk to Mitsubishi Bank, for example - they don't know or care what's going on between France and Brussels," the source said. "They want to know where their guarantee is" that they won't be throwing good money after bad if they participate in the EUR7 billion bailout package orchestrated by the French state
last month.
"And if the smallest lender backs out, the next smallest will reason the same way and on up the chain, and the whole plan falls apart," he said.
