Banks agree Alstom rescue

28th May 2004, Comments 0 comments

PARIS, May 28 (AFP) - French Finance Minister Nicholas Sarkozy said Friday he had reached agreement with seven major banks for a capital increase at the ailing French engineering group Alstom.

PARIS, May 28 (AFP) - French Finance Minister Nicholas Sarkozy said Friday he had reached agreement with seven major banks for a capital increase at the ailing French engineering group Alstom.

But he also disclosed that there was a "problem" with one of them on customer guarantees.

"On the capital increase, seven banks have given their consent," Sarkozy said at an Alstom plant near La Rochelle in western France.

"As for the EUR 8 billion (USD 9.8 billion) in guarantees, six of them have agreed. There remains one last problem to solve but I am confident."

He added that he hoped the matter could be cleared up by the end of the week. Customers of Alstom, which is to be rescued under a plan partially financed by the French state, have asked for financial guarantees for the group's commercial activities for the next two years.

The rescue scheme also allows Alstom creditor banks to convert debt of EUR 700 million into equity. They are in addition being asked to underwrite a further increase of capital by the company amounting to EUR 1 billion.

The effects of these stock issues will be to dilute a holding of up to 31.5 percent in Alstom that the state has been authorized by European Union competition authorities to take in the company.

Alstom shares were down four percent to EUR 0.96 in morning trading on an overall Paris market that had dipped 0.35 percent to 3,666.38.

Sarkozy said Friday he was not concerned about Alstom's sliding share price.

"You have to look at it in the long term, not day to day," he said. "When I bring out the agreement with the banks I am sure that the share will go up."

© AFP

Subject: French news

 

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