(Reuters) -French train maker Alstom on Wednesday detailed its plan to cut debt and reform its finances including a $1 billion rights issue supported by main shareholders, and comfortably beat cash-flow expectations.
Its two main shareholders, Caisse de dépôt et placement du Québec (CDPQ) and Bpifrance, which hold stakes of 17.4% and 7.5% respectively, have agreed to participate in the capital increase.
Alstom had flagged a potential capital increase late last year, sending shares tanking after a cash-flow warning in October made clear to investors it was struggling with debt.
Its shares were up 5% as of 0845 GMT, after rising as much as 10% earlier.
Jefferies analysts flagged a stronger second half of the year, and said Alstom’s new outlook for a cash inflow of between 300 million and 500 million euros for the current fiscal year “looks fine,”.
It posted a cash outflow of 557 million euros, beating a company-provided consensus that had expected an outflow of 632 million.
Alstom is the world’s second-biggest train maker after China’s state-owned CRRC and has contracts on its order books from Britain for its HS2 high-speed railway and for the largest train tender in Danish rail history.
Its cash problems are due in part to inheriting problem contracts after the 2021 acquisition of Bombardier’s rail business.
“We knew we’d need three or four years to integrate (the acquisition),” Chief Executive Henri Poupart-Lafarge told journalists on a call.
The plan detailed on Wednesday which also includes issuing hybrid bonds for around 750 million, and previously announced disposals of parts of the business for about 700 million, would bring in about 2.45 billion, according to Reuters calculations.
That’s more than it’s target of cutting net debt by 2 billion euros by March 2025.
Poupart-Lafarge also told analysts on a call there could be more disposals beyond the debt-reduction plan, and the group would monitor potential acquisitions too.
“We consider that demand in the market will remain favourable,” the CEO added on a call, adding the debt-reduction plan should be executed in the first half of the fiscal year.
Full-year sales rose 6.7% to 17.62 billion euros.
(Reporting by Olivier Sorgho; Editing by Tom Hogue, Christopher Cushing, Edwina Gibbs, Alexandra Hudson)
