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Last Updated: Monday, 22 September, 2003, 16:25 GMT 17:25 UK
New Alstom rescue deal unveiled
Engineers fixing Alstom trains
The French government has finally agreed a new 3.2bn euros ($3.5bn) rescue plan for ailing engineering giant Alstom.

The company, which has debts estimated at 5bn euros, would almost certainly have gone bust if a deal had not been reached.

A previous bail-out package was blocked by the European Union, which said the deal amounted to illegal state aid.

Under the new plan, the French government will not become a direct shareholder in the group, but banks and the government will instead buy some of the firm's debts.

Alstom
Total debt: 5bn euros
Last year's loss: 1.4bn euros
Share price at 1998 listing:
31.25 euros
Share prices when suspended, Sept 2003: 2.8 euros
Workforce: 118,000
The EU said the concessions made by France were satisfactory but said the overall bail-out plan would still need to be approved in the coming months.

Should the Commission decide the entire aid package is illegal, Alstom will be forced to pay back the money.

EU competition commissioner Mario Monti praised France's cooperation and said he had dropped the threat of legal action, confident that France was working on an acceptable compromise.

"I have in my hands the unconditional agreement of the French authorities not to put in place what we did not want them to put in place," he said.

Job losses

Alstom has a workforce of 118,000 in more than 70 countries, including 28,000 in France.

In the UK, the company employs 11,000 workers at factories in Birmingham, Rugby, Stafford and elsewhere.

The company, which makes trains, gas turbines and cruise ships, has announced plans to cut jobs - including about half of its UK workforce - in an effort to stem losses.

It has been hit hard in recent months by weak power markets as well as cost overruns on key projects and accounting irregularities at its US operations.

The company is also weighed down by debts estimated at 5bn euros, dwarfing its total market value of about 1 billion euros.

France's finance minister Francis Mer cancelled his trip to the G7 meeting in Dubai at the weekend to hammer out the new agreement.


SEE ALSO:
EU blocks Alstom rescue plan
17 Sep 03  |  Business
French PM upbeat on Alstom
22 Sep 03  |  Business
Alstom confirms huge job cuts
10 Aug 03  |  Business


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