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[the knowing] 26/5/2004 09:53

Alstom's Kron rules out any tie-up with Siemens

PARIS (AFX) - Alstom SA chief executive Patrick Kron ruled out any tie-up
with Siemens AG among the industrial partnerships that have been required by the
EU Commission as part of its approval of a rescue package.
Speaking at a press conference, Kron said an alliance with Siemens was not
in the interest of Alstom's clients or shareholders.
"A little while ago, I had said that we had not held any talks with Siemens
because such an alliance was not in the interest of our clients, who are
purchasing in a sector that is already highly concentrated," Kron said.
"It is also not in the interest of our employees or shareholders. I have no
reason to change my mind today," he said.
Siemens has expressed an interest in forming an alliance with Alstom in the
power production segments, as part of a goal for constructing European
industrial heavyweights.
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afp/js/cml

[grupo guitarlumber] 26/5/2004 09:52

PARIS (AFX) - Alstom SA expects the implementation of its financing rescue
package will allow the group to return to positive free cash flow in the full
year 2005/2006.
Operating margins should reach 6 pct by then, compared with an operating
margin of 1.8 pct for the full year to March 2004.
Free cash flow was a negative 1.007 bln eur last year, compared with a
negative 265 mln the previous year.
The company said demand for power equipment is weak and will remain so over
the coming months, but the market for power generation service was sound, and
demand for rail transport was "buoyant".
In total, new orders rose 34 pct on a comparable basis in the second half of
last year, and "the margins on these orders are consistent with our performance
targets."
The order backlog stood at 25.4 bln eur at the end of March 2004,
representing around 18 months of sales.
Alstom's Power Service unit was the only of its 7 main divisions to post
EBIT operating profit over the full year, at 227 mln eur, down from 304 mln the
previous year.
Concerning the outlook for orders, Kron said April's order intake has been
sustained, and he expects an increase in orders once the terms of the
refinancing deal have been approved.
"In the first half of last year, before the financing package was announced
(in September), and when there were concerns about our liquidity, our order
intake was down 23 pct," Kron said during a conference call.
Once the refinancing package was announced, however, orders recovered
strongly, Kron said.
"This means that when our customers have confidence in our ability to move
ahead, they trust us and they support us," he said.
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js/lam

[grupo guitarlumber] 26/5/2004 08:36

PARIS (AFX) - Alstom SA chief executive Patrick Kron said the French
government will hold its direct stake in the company over the "medium term",
upon completion of a refinancing package.
"We expect the state to be a shareholder during the recovery phase, and we
expect the French state to accompany our recovery over the medium term," Kron
said during a conference call. "The state is not viewed as a short-term
investor."
Alstom has targeted a return to positive free cash flow and a recovery of
operating margins in its full year 2005/2006, and Kron said the government has
not been given a deadline to sell its stake.
The state will hold between 18.5-31.5 pct of Alstom after it participates in
an upcoming share capital increase, and converts up to 800 mln eur of debt into
equity.
The refinancing plans are part of a package that was implemented in
September, but which has not yet received formal EU Commission approval, which
is now expected in June.
The terms of the package are expected to be agreed by the French government
and the EU today, Kron said.
Concerning the industrial partnerships that will be required of Alstom
within the next four years, Kron said these will focus on developing activities
in promising markets including Asia, the Middle East, Latin America, and Eastern
Europe.
He refused to identify any potential partners, but both Siemens and ABB have
expressed an interest in Alstom's businesses.
"We will define our partnerships, and there will be many partnerships,
according to the targets we have set," he said.
"If we want to develop our position in China, in Asia or any other promising
market or in any specific product line, we will find specific partnerships,"
Kron said. "We don't exclude any specific area."
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js/jsa

[grupo guitarlumber] 26/5/2004 08:16

PARIS (AFX) - Alstom SA said it will raise 1.8-2.5 bln eur of new equity as
part of the rescue deal agreed by the EU Commission and the French government,
which will see the French state take a direct stake in the company.
Among the measures to be implemented soon, Alstom will launch a new share
rights issue of 1-1.2 bln eur. This comes just months after more than 1 bln eur
in shares and bonds were raised by the company in January.
Alstom said the French state will subscribe 185 mln eur to this share
increase.
The French government will also convert a 300 mln eur bond into shares once
the EU Commission approves the package, giving the French state an 18.5 pct
stake in the company.
The French state will also convert another 500 mln eur of subordinated bonds
into Alstom shares via a debt-to-equity swap, but the total amount converted may
be lower, as the French government has agreed to limit its direct equity stake
in Alstom to 31.5 pct.
Creditor banks will also swap a total 700 mln eur of outstanding Alstom debt
for equity.
Business divestments representing about 10 pct of group sales, or 1.5 bln
eur of revenues, will also be divested as part of the rescue package.
Alstom said about half of these divestments will come from the sale of its
freight locomotive business in Valencia, Spain; transport activities in
Australia and New Zealand; and its industrial boilers business.
The remaining divestments have not yet been identified, but the divestments
will be completed within 2 years.
Alstom has also agreed to form industrial partnerships for its other
businesses within 4 years.
As part of this, Alstom plans to form a 50-50 joint venture for its
hydroelectric power business within a few years, but did not identify who this
partner might be.
Chief executive Patrick Kron said in a conference call following the
results that these alliances would focus on developing Alstom's operations in
Asia, the Middle East, Latin America, and Eastern Europe.
Also, Alstom has agreed not to make any acquisitions within Europe for its
Transport operations within the next 4 years.
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js/cml

[grupo guitarlumber] 26/5/2004 06:58

Paris and Brussels resolve their differences over Alstom
By Daniel Dombey in Brussels and Martin Arnold in Paris
Published: May 26 2004 5:00 | Last Updated: May 26 2004 5:00

The French government and the European Commission yesterday ended nine months of strife over France's plans to bail out Alstom, the engineering group, by agreeing that it would form alliances with other private companies.


Last minute pressure by Mario Monti, competition commissioner, led Nicolas Sarkozy, France's finance minister, to promise that Alstom would form at least one "industrial partnership" over the next four years - and that it would concern a "significant part" of Alstom's assets.

The agreement also makes clear that the Commission could approve further government investments in Alstom - and Mr Monti, who will be leaving office in October, will no longer be able to supervise proceedings.

Mr Monti and Mr Sarkozy struck their deal after a telephone conversation ahead of Alstom results due today. Lower level officials have also been working on the divestitures Alstom should carry out separately in return for €3.2bn (£2.1bn) of government aid, including an €800m debt-equity swap that could give the French state as much as 31.5 per cent of Alstom's shares.

Patrick Devedjian, French industry minister, said yesterday that the Commission had made the bailout conditional on Alstom's disposing of businesses accounting for 10 per cent of its revenues, or about €1.5bn.

A formal Commission decision on the case, which will incorporate the Paris-Brussels deal, will take several weeks to conclude.

The Commission believes the partnership commitment should force Alstom to cede at least equal control over one of its two showpiece businesses - high-speed TGV trains and gas turbines - to another private sector group. A French finance ministry official said the deal did not mean Alstom would be broken up. "We will see what industrial partnerships mean in four years time, which is a long way away," he said. Mr Monti also believes that he has given his successors greater latitude to stop future state involvement in Alstom - although he was unable to block this option altogether.

The text agreed by the two sides states that the "partnerships will not involve businesses controlled by the French state, in law or in fact, individually or collectively - unless by prior agreement with the Commission".

The battle over Alstom began in August when France announced its bailout plans for the group without consulting Brussels. Additional reporting by Bettina Wassener in Frankfurt .....................................................................................

[grupo guitarlumber] 25/5/2004 08:59

PARIS (AFX) - The European Commission wants Alstom SA to make divestments
worth 1.5 bln eur in sales as part of an agreement with the French government to
save the troubled engineering company, Junior Industry Minister Patrick
Devedjian said.
Speaking on French radio Europe 1, he said the government's objective
remains to avoid dismantling the troubled engineering group, and that he expects
an agreement between the French government and the EU to be announced soon.
Recent press reports have put the amount Alstom must divest at around 1.6
bln eur in sales, which the EU wants in order to compensate for state aid
granted to the company.
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dt/sr/cmr

[grupo guitarlumber] 24/5/2004 11:45

PARIS (AFX) - The industrial partnership that the European Commission is
requiring Alstom to forge as a condition for approving its state bailout need
not necessarily involve a European company, said a source close to the
negotiations.
"They have a choice of all partners, except Areva," the source said.
This morning, the commission said its approval of the French government's
bailout of Alstom is conditional on the company forming an industrial
partnership.
The commission also said there must be a clear timetable for such a deal.
Also today, German news agency DPA reported industry sources as saying
Siemens AG is not interested in Alstom's train business.
Siemans and Areva have been touted as potential industrial partners for
Alstom.
/cw

[grupo guitarlumber] 24/5/2004 09:51

BRUSSELS (AFX) - The European Commission said its approval of the French
government's bail-out of Alstom is conditional on the company forming an
industrial partnership.
The commission said competition commissioner Mario Monti held talks with
French finance minister Nicolas Sarkozy over the weekend. Monti warned the
French government that it may only support Alstom if the group forms a
partnership.
"Undertakings on industrial partnerships are essential elements for the
commission's approval, that is to say a necessary condition to ensure at the
same time the viability of Alstom and necessary to redress distortions created
to competition by state aid," said the commission.
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ed/jfr

[ariane] 23/5/2004 19:05

FRANKFURT (AFX) - Siemens AG expects EU Competition Commissioner Mario Monti
and French Finance Minister Nicolas Sarkozy to make public their decision
regarding the 3.2 bln eur rescue package for Alstom this week, but the German
electronics and engineering company does not think it will be able to acquire
any of its rival's units, Welt am Sonntag newspaper reported, citing unnamed
sources within Siemens.
Siemens believes that Alstom will not be forced to sell either its
transportation or power generation units. Instead, Siemens may be able to form
partnerships with these divisions in two years' time according to the terms
of the EU decision, Welt am Sonntag reported.
If the EU decision does not include any clause about Alstom's need to form
partnerships with rivals, Siemens may consider taking legal action, Die Welt
reported.
amk/bam

[maywillow] 21/5/2004 12:01

PARIS (AFX) - Siemens AG has made a firm offer to Alstom SA that would avoid
the troubled engineering group being dismantled, French daily La Tribune
reported, without citing sources.
In doing so, Siemens wants to prevent Alstom from using time after its
planned recapitalisation to gain market share, the report said.
The report said Siemens is opposed to the European Commission making a deal
with Alstom under which the company would agree to form a partnership with
another company once its financial situation has improved in two years time.
La Tribune said Siemens is interested in the whole of Alstom's business,
which would give the German conglomerate greater market share and also growth
potential in servicing activities.
Such a move would allow Siemens to create a European player able to compete
with General Electric Co, the report said.
[e-mail]
sr/jms

[maywillow] 20/5/2004 13:37

LONDON, May 20 (New Ratings) — Analysts at JP Morgan issue an “underweight” rating on Alstom (AOM.FSE).

In a research note published this morning, the analysts mention that Alstom is likely to report its FY04 results broadly in-line with expectations. JP Morgan expects the company to post FY04 cash outflow from operations and net debts of €1.4 billion and €3.1 billion, respectively.

[waldron] 20/5/2004 06:33

Siemens keeps its own counsel
By Daniel Dombey in Brussels and Peter Marsh in London
Published: May 20 2004 5:00 | Last Updated: May 20 2004 5:00

Ministers and officials in Paris, Berlin and Brussels have all been exercising their minds about a possible alliance between Alstom and Siemens of late.


But while meetings have been held and cancelled in recent weeks, the diversified German engineering group has been thinking some thoughts of its own.

From his headquarters in Paris, Nicolas Sarkozy wants to ensure an all-French solution to Alstom's problems - and believes the deal he has struck with Mario Monti has done just that.

Mr Monti, however, believes that Alstom's long-term viability will not be assured by the French government's injection of €800m ($960m) in return for a 31.5 per cent stake.

The competition Commissioner thinks he will get his revenge by forbidding Paris from propping up Alstom any further - even if it is through Areva, the state-owned energy group.

He wants to set a schedule for the group's organisation into more distinct units, in preparation for alliances with other companies - in which typically, those other groups would exercise at least equal control.

Such sales and spin-offs would be in addition to the divestments for some €1.6bn that Paris has agreed as an immediate condition of its outline agreement with Mr Monti.

But sceptics will be quick to note that anything can happen in Brussels' three to five-year time-scale - and that Paris has yet to sign anything at all.

In addition, Siemens' thoughts may not be to the liking of any of the governments involved - even Berlin, which has not disguised its desire to see new pan-European champions.

For while the company thinks its operations across the board have been disadvantaged by the subsidies Alstom has received, it is far from interested in acquiring everything that Alstom might offer.

Heinrich von Pierer, Siemens chief executive, is thought to be particularly keen on taking over Alstom assets that would give access to its business in servicing and refurbishing existing power stations, rather than the turbine-building operation.

This is a business estimated to be worth about 40 per cent of the €10.9bn sales of Alstom's power generation business in 2002/03.

This looks attractive to Siemens because, out of a world market for power generation installations and services of some €160bn a year, the service component accounted for about €70bn last year, according to industry estimates.

It is all the more so because Alstom or its precursors have been responsible for building 28 per cent of total world power station installed capacity of 3,683GW, according Alstom figures.

That puts the French group ahead of both Siemens, with 17 per cent, and General Electric, with 23 per cent.

By contrast, it is highly likely Siemens would want to shut down much of Alstom's manufacturing of parts, such as turbines, generators and boilers, which would lead to large job losses.

Alstom's power generation operations employ 45,000 people world-wide, more than two-thirds of them in Europe.

source:ft.com

[waldron] 19/5/2004 10:57

FRANKFURT (AFX) - The French government's rescue plan for Alstom should
include the condition that within two years it must form a cooperation agreement
with an unspecified "strong industrial partner", EU competition commissioner
Mario Monti has insisted, Handelsblatt reported citing unspecified industry
sources.
This means that Siemens could still make a bid for the troubled French
engineering giant, the report said.
Negotiations over Siemens and Alstom will be the subject of a summit meeting
in Berlin between representatives of the French and German government, which
will take place during the first weekend of June, it said.
amk/jkm/

[waldron] 19/5/2004 10:08

FRANKFURT (AFX) - Siemens AG's lawyers are examining the possibility of
making a legal claim against the French government's subsidies to troubled
engineering giant Alstom, Handelsblatt reported on its Website, citing a company
source at a meeting in Shanghai.
"The board of directors is united on this issue," the source told
Handelsblatt. "In a worst case scenario, we will sue."
EU competition commissioner Mario Monti and French Finance Minister Nicolas
Sarkozy have agreed upon a rescue package for Alstom, Handelsblatt reported. If
the European Commission approves this package, Siemens will consider legal
action, the newspaper said.
A Siemens spokesman in Munich declined to comment.
zb/she/amk/jfr

[waldron] 19/5/2004 07:02

VT floats bid idea for shipyards
By Mark Odell
Published: May 19 2004 5:00 | Last Updated: May 19 2004 5:00

VT Group yesterday signalled it would consider bidding for the two shipyards in Scotland, which BAE Systems has indicated could be sold if it decides to dispose of its naval business.


Paul Lester, chief executive of the shipbuilding and support services group, confirmed that he was interested in buying the surface ship business and the two yards on the Clyde in Glasgow, but ruled out a bid for the submarine business at Barrow in Cumbria.

He said he was expecting a memorandum of information in the "next few weeks" from BAE, which has also held initial talks with Thales, the French defence contractor, and General Dynamics of the US.

But BAE denied it was at the stage of issuing a memorandum of information. "We are still reviewing our options, which include retention of the business, and haven't got to that point yet," it said.

The former Vosper Thornycroft has grown rapidly its support services business in defence, education and vocational training in recent years. Its shipbuilding business now accounts for only 20 per cent of operating profit.

The expression of interest came as VT Group reported a sharp jump in pre-tax profit for the year to the end of March from £11.6m to £26.3m. Underlying profit before exceptionals and amortisation charges rose 11 per cent to £46.2m, ahead of consensus forecasts. Group turnover, including the share of joint ventures, rose by almost a fifth to £671m.

Shipbuilding is expected to bounce back strongly in the next few years as production ramps up on big UK programmes. The group said it was confident that it could continue delivering growth and raised the final dividend from 8.4p to 9p. It also announced that Admiral Michael Boyce, the former chief of the defence staff, would join its board in late July replacing Sir Jock Slater, the former head of the Royal Navy, as one of six non-executive directors.

FT Comment

* The shares have had a good run in recent months as investors recognised VT's switch into support services. But the acquisition of BAE's shipbuilding assets would have a large impact on the balance of the group and investors would be well advised to see what the group plans to do with them. Analysts are looking for pre-tax profit of £50m this year, giving earnings per share of 20p. This puts VT on a forward p/e multiple of just under 13, which seems about right.

[ariane] 18/5/2004 16:48

PARIS (AFX) - Finance Minister Nicolas Sarkozy said the French state will
transform the debt owed it by Alstom into shares in the company, as part of a
new financial aid package that is currently being negotiated with the EU
Commission.
The French state made several loans to Alstom in September, including a 900
mln eur bridging loan, as part of a 3.5 bln eur rescue package, but these funds
are expected to be exhausted within the coming months.
Speaking to the National Assembly, Sarkozy also said that as part of the new
aid package, Alstom's creditor banks will be asked to transform some of their
debt into Alstom shares.
"The banks still need to be convinced, so that they will accept their
responsibilities," Sarkozy said. "You can count on the determination of the
government to convince them."
The new aid package will not require the closure of any Alstom production
sites in France, and will not lead to a break up of the company, Sarkozy added.
"The government is convinced that Alstom is a viable enterprise, because its
main markets are in energy and transportation," Sarkozy said.
"Alstom has had financial difficulties because it was under-capitalised and
there were management errors that are not the fault of its employees, and there
is no reason why the women and men of Alstom should pay for errors that they did
not make," he said.
[e-mail]
js/cml

[ariane] 18/5/2004 13:16

BRUSSELS (AFX) - The European Commission said it is close to a deal with the
French government on a state-sponsored rescue plan for stricken engineering
group Alstom SA.
"We are close to it (a deal), but there is nothing yet," commission
competition spokesman Tilman Lueder said.
vm/rhb

[ariane] 18/5/2004 08:45

PARIS (AFX) - The French government and the European Commission yesterday
agreed a 2.0-2.5 bln eur recapitalisation plan to rescue troubled engineering
group Alstom SA, according to a report in French daily La Tribune, citing
sources close to the matter.
Yesterday EU competition commissioner Mario Monti said there is "the basis
for an agreement this week" on the French government's planned bailout package
for Alstom.
The report said there are no plans for a tie-up between Alstom and French
nuclear group Areva or Germany's Siemens AG.
In September Alstom said the French government would contribute 800 mln eur,
of which 300 mln was to be converted into shares subject to EC approval.
But Monti agreed yesterday that all of the 800 mln eur will be converted
into shares, La Tribune said earlier. The French government's stake in Alstom
will rise to 40 pct from 18-20 pct agreed in the initial plan, it added.
The report said the new plan also includes a capital increase of around 1
bln eur.
Alstom's 3.5 bln eur financing facility agreed in September may be increased
to 7.5-8.5 bln eur, La Tribune added.
In September Alstom said a syndicate of banks is providing a contract bonds
and guarantees facility of 3.5 bln eur, counter-guaranteed in part (65 pct) by
the French state, which will allow Alstom to cover its normal level of business
activity.
[e-mail]
sr/lam

[ariane] 18/5/2004 08:00

FRANKFURT (AFX) - ThyssenKrupp AG's purchase of the Howaldtswerke-Deutsche
Werft (HDW) shipyard will generate an estimated 1,000 job losses among the
operations' combined 9,300-strong workforce, daily Die Welt quoted unnamed
sources as saying.
The newspaper quoted the head of HDW's works council, Ernst-August Kiel, as
saying the deal, which was announced yesterday, will lead to an unspecified
number of job losses.
jms/lam

[ariane] 18/5/2004 06:58

Paris and Brussels reach Alstom deal
By Daniel Dombey in Brussels, Richard Milne in Paris and Bettina,Wassener in Frankfurt
Published: May 18 2004 5:00 | Last Updated: May 18 2004 5:00

Nicolas Sarkozy, France's finance minister, and Mario Monti, EU competition commissioner, yesterday revealed they had come to an outline deal over Alstom, the stricken French engineering giant, so ending a Paris-Brussels dispute.


The battle has pitted the European Commission, which regulates national subsidies in the EU, against the French government, which has been intent on preventing Alstom from being broken up.

People close to the case said Alstom would remain a stand-alone group and would not be forced into an alliance with Siemens, its German rival, or Areva, France's state-controlled nuclear energy group.

Alstom could have to carry out significant divestments to compensate for state aid that Brussels has estimated at more than €3bn ($3.6bn) - but the company would not have to sell off its show-piece high-speed trains or gas turbines businesses.

Mr Monti and Mr Sarkozy declined to give any details of their deal.

"We have the basis of an agreement and this should be finalised by the end of the week," Mr Monti said. Formal Commission authorisation of the French measures may take several further weeks.

"Alstom will not be dismantled. There will be disposals, but we will keep the basic structure of Alstom," a French finance ministry official said. The official indicated it would be an all-French solution "leaving a viable company".

Alstom declined to comment yesterday. But a person close to the group said the outline plan would allow all senior managers including Patrick Kron, chief executive, to remain.

However, large-scale divestments would also allow Mr Monti to claim he had protected the integrity of Brussels's policy of controlling government subsidies.

The Alstom case has been particularly sensitive, since Mr Monti was infuriated when Paris announced a bail-out plan last year without consulting him, even though it involved taking a government stake in the group.

However, Mr Monti's brief has been complicated by his twin duties of cracking down on state aids and policing companies' mergers.

Last year, a Commission report concluded that a sale of either one of Alstom's main businesses to Siemens, the most likely purchaser, could create antitrust problems.

However, Siemens has been concerned that the Commission has not paid sufficient attention to its own complaint that it has been hit hard by the subsidies to Alstom.

The company has suggested that a Commission green light for an Alstom bail-out could lead it to take legal action.