French train manufacturer Alstom has finalised its 2 billion euro recapitalisation and asset disposal programme by selling its American rail signalling business for $690 million. This sale marks the culmination of Alstom’s efforts to address financial challenges stemming from its 5.5 billion euro acquisition of Bombardier Transportation during the pandemic. The North American signalling business, which manages approximately half of the United States’ railway network, has been purchased by German industrial group Knorr-Bremse. This transaction completes Alstom’s strategic plan to raise 2 billion euros and reduce its debt burden.
Alstom’s financial difficulties were exacerbated by issues at its Derby factory in the UK, which faced potential closure due to a lack of new rolling stock orders from the British government. The company also encountered problems with its Aventra trains and saw its involvement in the HS2 project curtailed following government decisions to limit the high-speed rail line’s extent.
At its peak, Alstom’s debt reached 3.4 billion euros, with the company losing 60 million euros monthly. This precarious situation prompted the board to initiate a 2 billion euro cash-raising plan, including a 1 billion euro rights issue, for a business valued at 8.5 billion euros.
Knorr-Bremse, the purchaser of Alstom’s signalling business, is a well-established player in the rail industry, known for its braking systems for trains, lorries, and buses. The German company, valued at 11 billion euros, has a significant presence in the British rail supply chain through its acquisition of the Westinghouse braking systems business.
This divestment represents a crucial step in Alstom’s financial recovery, allowing the company to focus on its core operations and strengthen its balance sheet. The move is expected to improve Alstom’s financial flexibility and position it for future growth in the global rail industry.
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