15 Mar 2002 – French industrial conglomerate Alstom SA said yesterday it will sell €1.65bn ($1.45bn) worth of non-core assets and property to strengthen its balance sheet following the bankruptcy of one of its biggest clients.
Alstom said it will sell real estate worth ?750 million by the end of this year and will divest ?900 million of non-core assets by March 2003.
The Paris-based company is the world’s largest maker of cruise ships and also builds trains and power-generation equipment.
Alstom did not provide details of the assets that will be sold but did say that it plans to sell 12 individual businesses from across all its sectors of activity. The company emphasized that it does not plan to sell entire sectors of its operations. It said it has hired advisers to sell some of the businesses but is still looking for advisers to sell others.
Alstom also said it will seek to raise an additional ?450m through a rights issue sometime after May, depending on market conditions. The company’s business was hurt by the Sept. 11 attacks after its customer Renaissance Cruises Inc. filed for Chapter 11 protection because of a sharp decline in people’s interest in cruises.
Alstom had helped Fort Lauderdale, Fla.-based Renaissance Cruises to buy its ships though a method known as vendor financing, whereby the French company effectively guaranteed loans to its client.
Alstom said in September that its exposure to Renaissance was ?684m but said Thursday that it has reduced its “theoretical exposure” to the cruise company to ?500m.
The company also said it is working on eliminating all vendor financing. In addition to the money-raising measures, Alstom said it is in talks with its banks about restructuring its debt with the aim of potentially revising maturity dates and bank covenants.
The company said it has secured back-up credit lines worth ?850m. Alstom’s net debt is about ?1.2bn, representing a debt-to-equity ratio of about 55 per cent.
The company said it aims to reduce this to 20 per cent by 2005. Alstom’s market cap is about ?3.2bn.