The French-owned company with a Derby site that supplied rolling stock to the Elizabeth Line asked its shareholders to contribute €1 billion in order to get back on track.
Alstom, the company that operates the historic Litchurch Lane Train Works, has launched a rights offering as part of an €2 billion refinancing plan to avoid a downgrade of its credit rating.
The company plans to raise €700m through asset sales and €750m in hybrid bonds before the end of September. These funds will go towards reducing its leverage. At the end of March 2013, net debt was almost €3 billion, which is just over 3.2-times adjusted earnings before taxes, interest and other charges. This represents an increase from €2.3billion
Moody’s downgraded the credit rating of the company in October from Baa3, which had a stable outlook to negative. Alstom has been upgraded from negative outlook to stable by the agency, if rights issue and debt-raising are completed.
Alstom already agreed to the sale of its North American Signalling Business, which will generate around €630 Million when the deal is completed in the summer.
Bpifrance, Caisse de depot et placement du Quebec and Bpifrance together own 24,9% of Alstom. They have agreed to subscribe for the rights issue.
Last month, the government launched a desperate effort to keep Derby’s factory open so that it could assemble the rolling stocks it had been contracted to supply for HS2.
The transport secretary has agreed to a new commitment to build more trains on London’s Elizabeth Line. This will keep Derby’s core workforce and supply chain in work until 2026 when the HS2 train manufacturing is scheduled to begin.
Alstom’s spokesman said that the company is “in an intense period of discussions” with Transport for London and the government about a possible train order for Elizabeth Line, given the level of passenger demand.
In 2019, the factory completed assembly of 70 nine car units for Elizabeth Line. The factory was previously owned by Bombardier before it was taken over by Alstom. The factory had no new assembly work to do at the beginning of 2019 and began notifying its 1,300 employees of imminent redundancy.
Last year, the value of orders dropped to €20.07 billion from €18.4billion in the year before. The company reported a net loss in the amount of €307 millions, up from €132 million last year. The company’s free cash flow reached €557m, compared to an inflow last year of €199m.
Henri Poupart Lafarge, Alstom’s chief executive, stated that the group has recorded “a solid rebound” in terms of cash generation and “solid” orders during the second half.
Alstom, the second largest train manufacturer in the world after China’s state-backed CCRC.
The Paris-listed stocks closed €1.47 or 9.4 percent higher at €17.11.