Tufton Assets Share Discussion Threads

[grupo] 09/7/2004 14:06

PARIS (AFX) - Alstom CEO Patrick Kron said the partnerships the company must
enter into, under EU conditions for approving the state-sponsored rescue plan
for the group, do not demand any loss of control for the company.
"There is no imposition of any loss of control in any of the activities
concerned," Kron said.
[e-mail]
dec/jad/hjp

[waldron] 09/7/2004 07:19

(Updating with terms of financing plan if amended)

PARIS (AFX) - Alstom SA said ahead of its AGM today it is "highly probable"
the quorum required for its 500 mln eur capital increase by debt-to-equity swap
reserved for the French state will not be reached.
If this is the case, the French engineering company will propose to amend
the structure of the financing plan.
It said however any changes will not affect the maximum amount of the total
capital increase of 2.2 bln eur.
Alstom said the "widespread shareholding structure and a large proportion of
non-French shareholders" is the reason quorum may not be reached.
The other two resolutions to be voted on at the AGM are firstly a capital
increase in cash with preferential rights up to a maximum of 1.2 bln, and
secondly a capital increase by debt-to-equity swap reserved for creditors other
than the French state to a maximum of 700 mln eur.
Along with the 500 mln eur capital increase reserved for the French state,
this takes the total amount of these three capital increases to 2.2 bln eur,
Alstom said.
If Alstom does, as it expects, amend the structure of the financing plan,
the maximum amount of the capital increase with preferential rights would be
increased to 1.7 bln eur from 1.2 bln.
This transaction could be subscribed in cash or by conversion of debt due
and payable, including the 500 mln eur of debt from the French state, it said.
At the same time, the maximum amount of the debt-to-equity swap reserved for
creditors other than the French state would remain at 700 mln eur and could be
reduced, in order to maintain the total target of 2.2 bln eur, Alstom said.
An Alstom conference call started at 8.30 am Paris time today.
[e-mail]
sr/wf

[ariane] 07/7/2004 16:19

FRANKFURT (AFX) - Siemens AG will thoroughly review the rescue plan for
rival Alstom SA which the EU Commission approved, a company spokesman said.
He declined to comment on what action Siemens might take after reviewing the
decision.
Alstom said the deal agreed with the the European Commission concerning its
rescue plan permits the French government to acquire a maximum temporary stake
in the company of up to 31.5 pct in exchange for earlier loans and future
financial support.
Siemens has previously said it can not rule out taking legal action against
Alstom over the government subsidies. The two companies compete in a number of
areas, including high speed trains and gas turbine power generation.
[e-mail]
ax/DP/ne/amk/cml

[maywillow] 07/7/2004 13:28

PARIS (AFX) - Alstom said the deal agreed with the the European Commission
concerning its rescue plan permits the French government to acquire a maximum
temporary stake in the company of up to 31.5 pct.
To date, the government has confirmed plans to convert a 20-year 300 mln eur
loan granted in the form of bonds last summer into a stake of around 18.5 pct.
Further plans for the state to contribute 185 mln to a capital increase and
convert a further 500 mln eur in subordinated debt would raise the government's
shareholding to a total of 31.5 pct.
An Alstom spokesman said: "The government has indicated it wishes to do this
and the plan will be put to the vote by shareholders on Friday."
Under the agreement with the Commission announced today, the government can
keep its stake for no more than four years and must sell the stake within 12
months of Alstom obtaining an investment-grade credit rating from a rating
agency.
Alstom said that after the agreement on new financial covenants agreed with
its creditor banks in late June, the debt-for-equity deal with the government
marks the second of three steps needed to make its finance plan a success; the
third being approval by shareholders at Friday's AGM.
[e-mail]
mrg/jsa

[maywillow] 07/7/2004 12:08

(Updating with further details from conference call)

PARIS (AFX) - Alstom CEO Patrick Kron said sales in the current year may be
lower than a year earlier, with a second half improvement not guaranteed to
offset weakness in the first six months.
The company earlier reported a 6 pct organic fall in first quarter sales to
3.312 bln eur.
Speaking in a conference call with analysts, Kron said: "We were expecting a
short level of sales in first part of year. We hope we will catch it up in
second half... (but) whether we are going to offset the first part of the year
during the second half remains to be seen."
Sales in 2003 fell to 16.688 bln eur from 21.351 bln the previous year.
Kron also said the company would not be raising, or detailing its guidance
for an order intake this year that is higher than in 2003, despite a 41 pct jump
in orders during the first three months.
"Obviously, up 40 pct is strong confirmation that we are on track for (the
target). I'm encouraged by this level, but I don't judge the group on three
months' performance," he said.
Kron did not comment on any issues related to the European Commission's
expected decision today on the rescue plan and financial restructuring package
for the group.
Regarding the target for an operating margin of 6 pct by 2006, Kron said
growing price pressure in markets such as gas turbines is not putting it under
threat, as it is based largely on cost-cutting expectations.
Kron noted that the strong level of order intake for the first quarter came
without booking a large order from RENFE, as new management at the Spanish state
railway reviews commitments made under the previous incumbents.
RENFE has delayed the signing of 2.3 bln eur worth of high-speed train
orders awarded to Alstom, Bombardier Inc and Siemens AG among others, according
to reports.
Kron said Alstom is "very confident" the orders will be honoured, "but we
only book orders when we are 100 pct sure."
The CEO was also asked about progress on two contracts in the group's Marine
division from Swiss cruise group MSC and from Gaz de France.
He said that neither deal is delayed, and that discussions to convert the
letters of intent into firm orders are continuing.
"Now in each case the customer is establishing the adequate financing
structure to buy the ships. It's a normal process... and may take some more
weeks to be finalised. That is what we are expecting," he said.
[e-mail]
jad/wf

[maywillow] 07/7/2004 12:06

(Updating with further details from conference call)

PARIS (AFX) - Alstom CEO Patrick Kron said sales in the current year may be
lower than a year earlier, with a second half improvement not guaranteed to
offset weakness in the first six months.
The company earlier reported a 6 pct organic fall in first quarter sales to
3.312 bln eur.
Speaking in a conference call with analysts, Kron said: "We were expecting a
short level of sales in first part of year. We hope we will catch it up in
second half... (but) whether we are going to offset the first part of the year
during the second half remains to be seen."
Sales in 2003 fell to 16.688 bln eur from 21.351 bln the previous year.
Kron also said the company would not be raising, or detailing its guidance
for an order intake this year that is higher than in 2003, despite a 41 pct jump
in orders during the first three months.
"Obviously, up 40 pct is strong confirmation that we are on track for (the
target). I'm encouraged by this level, but I don't judge the group on three
months' performance," he said.
Kron did not comment on any issues related to the European Commission's
expected decision today on the rescue plan and financial restructuring package
for the group.
Regarding the target for an operating margin of 6 pct by 2006, Kron said
growing price pressure in markets such as gas turbines is not putting it under
threat, as it is based largely on cost-cutting expectations.
Kron noted that the strong level of order intake for the first quarter came
without booking a large order from RENFE, as new management at the Spanish state
railway reviews commitments made under the previous incumbents.
RENFE has delayed the signing of 2.3 bln eur worth of high-speed train
orders awarded to Alstom, Bombardier Inc and Siemens AG among others, according
to reports.
Kron said Alstom is "very confident" the orders will be honoured, "but we
only book orders when we are 100 pct sure."
The CEO was also asked about progress on two contracts in the group's Marine
division from Swiss cruise group MSC and from Gaz de France.
He said that neither deal is delayed, and that discussions to convert the
letters of intent into firm orders are continuing.
"Now in each case the customer is establishing the adequate financing
structure to buy the ships. It's a normal process... and may take some more
weeks to be finalised. That is what we are expecting," he said.
[e-mail]
jad/wf

[maywillow] 07/7/2004 07:27

(Updates with further details on outlook, quote from chairman)

PARIS (AFX) - Alstom SA said it remains confident of achieving a turnaround
in its operations as orders in the first quarter of its 2004-2005 fiscal year
jumped 41 pct to 3.941 bln eur on a comparable basis.
"The orders of the first quarter of fiscal year 2005 confirm the positive
trend we reported in the second semester of last fiscal year. This provides us
good confidence to achieve our turnaround," chairman and chief executive officer
Patrick Kron said in statement accompanying first-quarter results.
Alstom said first quarter orders in its 2004-2005 fiscal year rose 41 pct on
a comparable basis, but were down 2 pct on a reported basis from a year earlier.
Sales reached 3.312 bln eur in the quarter, down 6 pct on a comparable basis
from year earlier, and down 24 pct on a reported basis from a year earlier.
On a reported basis, orders and sales were negatively impacted by negative
currency effects, and by the disposals of the company's Industrial Turbines and
Transmission & Distribution activities, Alstom said.
[e-mail]
lwl/wf

[grupo guitarlumber] 05/7/2004 16:16

BRUSSELS (AFX) - The European Commission will announce on Wednesday that
beleaguered French engineering group Alstom must form partnerships in
"significant parts of key activities" in return for EU approval of the plan to
bail out the company, said sources close to the case.
This move, while guaranteeing the future of the company, amounts to
something of a pyrrhic victory for Alstom which will have to relinquish a degree
of control in its main areas of operation, transport and energy, said the
sources.
The sources were citing the draft decision of the commission which will also
announce that the French government is pull out completely as a shareholder by
end-2008.
Concerning the partnerships, the decision will provide no further
illumination about what the commission has in mind. Sources said the decision
will merely describe partnerships as a scenario where the business undergoes a
"structural, long-term change involving some loss of control."
"The partnerships will not be defined any further. It is up to the French to
decide. What the commission will say however is that they must not be for ad hoc
projects and they must be long-term and concern a significant part of (Alstom's)
activities in key areas," said a source.
Competition Commissioner Mario Monti said in May that an example of an
industrial partnership would be a 50:50 joint venture for the hydro power
business which has already been agreed as a short-term measure to be taken
within a year.
The other partnerships do not need to be quite so drastic even if they do
affect all the key parts of the company's business, said the sources.
Nonetheless, one source said: "This might be a pyrrhic victory for Alstom
even though it looks like everybody got something."
The French government offered to give up its stake in Alstom to make the
point that its bailout of the company is not "effectively a re-nationalisation",
said one of the sources.
Wednesday's decision puts an end to a probe first opened in September.
[e-mail]
ed/pav/

[maywillow] 18/6/2004 08:51

(updates with comment that German building technologies unit is expected to
be sold by the end of the year)

ZURICH (AFX) - ABB Ltd chairman and CEO Juergen Dormann said he will not
make any large acquisitions in the next two years while the company consolidates
its turnaround programme, but once this process is complete he may look at
acquisitions, including acquiring parts of France's Alstom SA.
Speaking in an interview with Germany's Handelsblatt, Dormann said that for
now the Swiss engineering group wants to focus on putting together four
consecutive quarterly profits, improving its credit rating and paying a dividend
to shareholders.
"There will be no large acquisitions for the next two years," he said.
Once this process is complete, however, he will begin to look at
acquisitions, including parts of Alstom that could fit into ABB's two core
businesses, Power Technology and Automation Technology, the paper cites Dormann
as saying.
This could include Alstom's turbine operations, he added.
The European Commission recently approved a state-led rescue package for
Alstom, one of the conditions of which is the sale of operations equal to about
10 pct of revenues in the short term.
Dormann is stepping down as CEO at the end of the year to focus on his role
as board chairman.
He told the paper that he will will continue to play an active role in
strategic decisions even after Fred Kindle takes over as CEO, particularly when
it comes to acquisitions.
He also said that the company's ongoing divestment programme will continue
as it seeks to focus just on Power Technology and Automation Technology.
To this end, Dormann expects to sell ABB's German building technologies unit
by the end of the year, he said.
scs/jfr

[grupo guitarlumber] 09/6/2004 20:11

(Adding details, background)
ABOARD THE CHARLES DE GAULLE (AFX) - France and Britain said they have
agreed to work toward cooperation on the construction of their future aircraft
carriers.
French Defense Minister Michele Alliot-Marie and her British counterpart
Geoff Hoon, meeting aboard a French nuclear-powered carrier off the English city
of Portsmouth, said the two sides had set a June 2005 target for reaching an
industrial accord.
The two sides agreed an interim deadline of September for an initial joint
evaluation of the prospects of such an industrial pact.
The meeting was aimed at furthering discussions about whether and how to
align their countries' efforts to expand their naval fleets.
Both nations have announced the construction of conventionally powered
aircraft carriers, meant to be operational by 2015. France said in February it
was planning to build one, while Britain intends to build two.
Initial discussions are already under way between the major military firms
in both countries which are likely contractors for the multi-billion, multi-year
projects, including France's electronics defense firm Thales and warship builder
DCN.
[e-mail]
es/cs/mkh/vs/hjp

[grupo guitarlumber] 09/6/2004 18:17

ABOARD THE CHARLES DE GAULLE (AFX) - France and Britain said they have
agreed to work toward cooperation on the construction of their future aircraft
carriers.
"The objective of the procurement strand is to reach by June 2005 an agreed
understanding between industry and both ministries of defense on the prospects
for industrial cooperation between the two programs (on aircraft carrier
construction)," said the joint declaration, signed by French Defense Minister
Michele Alliot-Marie and her British counterpart Geoff Hoon.
[e-mail]
es/cs/mkh/vs/hjp

[waldron] 04/6/2004 13:55

PARIS (AFX) - Thales SA said it has formed a joint venture with state-owned
shipyard DCN in order to jointly lead the future French aircraft carrier
programme (PA2).
The venture will be held 65 pct by DCN and 35 pct by Thales, with equal
representation on the four member board, it said.
The main purpose of the venture, and the prime contract office incorporated
within it, is to lead the PA2 programme from conception to completion.
However, "it will also be able to assist the studies for potential
cooperation with the United Kingdom's future aircraft carrier programme, should
this be desired by both governments," it said.
[e-mail]
jad/cml

[grupo guitarlumber] 26/5/2004 10:26

Alstom to Sell Shares, Convert Debt in Financing Plan (Update7)
May 26 (Bloomberg) -- Alstom SA, the French builder of power stations that generate a fifth of the world's electricity, plans to increase equity by as much as 2.5 billion euros ($3 billion) in a bailout that will make the government the biggest shareholder.

The government will convert 300 million euros of bonds into stock, and Alstom will sell as much as 1.2 billion euros in shares and ask the state and banks to swap debt into as much as 1.2 billion euros more of shares. The European Union is expected to approve the rescue today, Chief Executive Patrick Kron said on a conference call.

The EU originally opposed the government-led bailout on competition grounds. At stake are 20,000 jobs in France with the company that also built subway trains used in London, New York and Singapore and the Queen Mary 2, the world's largest cruise liner.

``It's a stitch-up,'' said Andrew Bell, an equity strategist at Carr Sheppards Crosthwaite in London, which oversees $9 billion. ``I don't think it's government's duty to preserve jobs but to set the economic conditions in which companies can thrive.''

Shares in Alstom were unchanged at 1.18 euros at 10:44 a.m. in Paris, for a market value of 1.24 billion euros. That's about 5 percent of the stock's value when it began trading in June 1998.

Kron, 49, said that talks between France and the EU continued until this morning and he expects agreement in principle today. The state will hold between 18.5 percent and 31.5 percent of Alstom, he said. Formal EU approval will come in June.

EU Competition Commissioner Mario Monti said he will hold a media briefing on Alstom at midday in Brussels.

Contract Guarantees

Alstom is also putting in place access to 8 billion euros in contract guarantees over the next 2 years.

By intervening to save Alstom, French Finance Minister Nicolas Sarkozy is following a tradition of French governments stepping in to defend large companies. Taxpayers' money has been used to save Credit Lyonnais SA, armaments maker Giat Industries, the computer maker Group Bull SA and Air France SA.

British Midland, KLM Royal Dutch Airlines, British Airways and the Danish Transport Ministry all protested the European Commission's decision in 1994 to allow the French government to give Air France about $3.5 Billion in aid.

The European Commission has said Alstom must find ``industrial partners'' within four years. Kron told journalists in Paris these may include joint ventures. He ruled out closer ties with Siemens AG, Germany's largest engineering company.

Siemens spokesman Thomas Weber declined comment, reiterating the company will review the final package once it is approved.

Alstom also said today its net loss in the year to March 31 widened to 1.84 billion euros from 1.43 billion euros a year earlier. Sales dropped to 16.69 billion euros from 21.35 billion euros and debt fell to 3 billion euros from 4.9 billion euros.

`On Life Support'

``Alstom is on life support and it would have died a year ago if it wasn't being kept politically alive,'' said Daniel Broby, who manages $8.5 billion at Bankinvest and doesn't own the stock. ``The loss shouldn't be widening at this stage in the economic cycle. It has nothing to with normal business logic.''

Alstom expects demand for new power equipment to remain ``generally low'' over the next months and said the transport and power-service markets should remain ``generally sound.''

The company reiterated its target to reach an operating profit margin of 6 percent in fiscal 2006.

Under the terms negotiated with the EU, Alstom would sell additional units with 1.5 billion euros in sales and said about half of those have been identified.

Kron has expanded disposals to raise funds, selling Alstom's small and medium-sized turbines to Siemens for 1.1 billion euros and its power-networks unit to Areva SA for 920 million euros.

Under pledges made when he became chief executive in March 2003, Kron is trimming sales to 15 billion euros from 24.5 billion euros three years ago.

Alstom's finances suffered as a design fault on heavy-duty power turbines drained more than 4 billion euros in cash since 1999. The company and rivals such as General Electric Co., Siemens and ABB Ltd. also faced declining demand in the $135 billion power market.



To contact the reporter on this story:
Nicolas Johnson in Paris [e-mail]

To contact the editor responsible for this story:
Richard Vines at [e-mail]

Last Updated: May 26, 2004 04:46 EDT

[grupo guitarlumber] 26/5/2004 09:55

(Updates with source close to talks saying deal is done)

BRUSSELS (AFX) - EU competition commissioner Mario Monti will hold a news
conference on the French government's bailout of Alstom at midday, his office
said, with a source close to the talks saying the deal is done.
The source said the last adjustments to an agreement between the commission
and the French government are under way, "but the deal is done".
Yesterday, the French government bowed to commission demands that it find an
industrial partner for Alstom within four years.
vm/lam

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

PARIS (AFX) - Alstom SA chief executive Patrick Kron said he will not accept
any break-up of the company, even though he must search out industrial alliances
in order to gain EU Commission approval of the group's rescue deal.
"Alstom is a coherent industrial group that will recover and develop," Kron
said at a press conference. "Alstom is not a financial holding company."
As a result, there is no reason for Alstom to be a minority partner in any
of the industrial partnerships it will form over the next 4 years, he said.
[e-mail]
afp/js/jfr

[the knowing] 26/5/2004 08:53

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.
[e-mail]
afp/js/cml

[grupo guitarlumber] 26/5/2004 08:52

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.
[e-mail]
js/lam

[grupo guitarlumber] 26/5/2004 07:36

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."
[e-mail]
js/jsa

[grupo guitarlumber] 26/5/2004 07:16

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.
[e-mail]
js/cml

[grupo guitarlumber] 26/5/2004 05:58

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 07:59

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.
[e-mail]
dt/sr/cmr

[grupo guitarlumber] 24/5/2004 10:45

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 08:51

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.
[e-mail]
ed/jfr