London (Parliament News) – Alstom plans to raise €1bn to reduce debt, addressing struggles amid delayed orders and concerns about its Derby factory’s future. The move includes a €750m bond issue as part of a €2bn finance plan.
How Does Alstom Plan to Tackle its Financial Challenges?
Alstom intends to raise €1bn (£861m) to help cut its debt as the world’s second-largest train creator struggles with delayed demands amid concerns about the destiny of its Derby factory.
The Paris-listed company will hunt investors to increase the funds by September. It also prepares a €750m bond issue as a component of a €2bn new finance plan.
Alstom finances have been in the limelight after clients, including some in Britain, delayed putting in orders, raising worries over its cash flow and the future of its train manufacturer in Derby. It bought the place from Canada’s Bombardier in 2021 in a deal that created it the world’s second-largest train manufacturer after China’s CRRC.
Can Alstom Secure Funding Amid Delayed Orders and Concerns?
The slowdown in demands last year led to fears about staff at the factory as 1,300 jobs were put at risk. However, there are now expectancies that operations at the historic site, where manufacturing has taken place since 1876, can be safeguarded.
Last month the transport secretary, Mark Harper, met Alstom executives and reported that the UK’s Department for Transport had achieved an “agreement in principle” with Alstom to keep funding for a further five Elizabeth line trains, in addition to the five verified in March. He added that he was confident “a solution is now in sight”.
Alstom has also been involved in the UK by uncertainty over an order for new trains for HS2 after Rishi Sunak tossed the northern leg of the high-speed line initially offered from London to Manchester. The trains were due to be produced in Derby and at a Hitachi factory in Newton Aycliffe, County Durham.
What Measures is Alstom Taking to Address Debt?
Alstom is also reducing its operations as part of the debt-cutting plan. The approach has led to the sale of its stake in the railcar manufactory TMH for €75m in January and offloading its North American signalling corporation to Knorr-Bremse for €630m in a deal that is expected to be completed this year.
Alstom, reporting its full-year results, said its net debt situation was at €2.99bn on 31 March compared with €2.13bn a year earlier.
Alstom stated it booked €18.9 bn of orders between 1 April 2023 and 31 March 2024 against €20.7bn the earlier year. Adjusted net profit fell to €44m against €292m the previous year.
Henri Poupart-Lafarge, the chair and chief executive, stated: “Alstom recorded a strong rebound during the second half of the year, with solid order intake, strong organic growth, improved
profitability and €562m free cashflow generation.”
The UK government selected Derby in March to be the headquarters of its latest rail regulator, Great British Railways, in part because of the city’s legacy. The Derby factory has constructed rolling stock for railways across the UK and most recently, London’s Elizabeth line.