Alstom to cut debt through €1bn rights issue

(Sharecast News) - French train maker Alstom announced plans to raise €1bn from shareholders on Wednesday, as it looks to slash debt. The TGV manufacturer, the world's biggest train maker after China's state-owned CRRC, wants to reduce debt by around €2bn by March 2025, to avoid its credit rating being downgraded.

As at 31 March, net debt stood at €2.99bn.

The rights issue would be carried out by September, subject to market conditions, Alstom noted. A €750m hybrid bond will also be issued, while the dividend for the year to March end has been scrapped.

It has already announced plans to raise around €700m through divestments, including the sale of its conventional signalling business in North America.

Alstom said the deleveraging plan would allow for the "stabilisation" of its investment grade rating.

Chief executive Henri Poupart-Lafarge continued: "The group is capitalising on the solid operational progress made over the last three years and is launching new initiatives to improve its industrial performance and reduce overheads and indirect procurement costs.

"Altogether, Alstom is now set on a stronger foundations to deliver sustainable profit and cash generation."

Alstom posted sales of €17.6bn in the year to 31 March, up nearly 7% on a reported basis, while orders received fell 8% to €18.9bn

Adjusted earnings before interest and tax rose 17% to €997m, ahead of the €985m most analysts had been expecting.

Two of Alstom's main shareholders - Canada's CDPQ and Bpifrance - have both agreed to take part in the capital raise.

As at 0930 BST, shares in Paris-listed Alstom were up 5%.