FRANCE . FINANCE
The European Commission has formally approved a financial aid package granted by the French government to Alstom in support of its industrial restructuring. However, its implementation is subject to strict conditions, including divestments and measures to open up the market. “The important divestment, market-opening and restructuring measures allow for the re-establishment of sound competition conditions”, said Mario Monti, the EU’s competition commissioner.
The decision provides compensatory measures in various sectors of the group’s business, including asset sales that will reduce the group’s size by 10% in addition to the 20% reduction undertaken by Alstom under the current restructuring plan. These new divestments involve some rI.6 billion and include industrial boilers, transport operations in Australia and New Zealand and freight locomotives in Spain, plus r800 million in other business activities to be specified at a later stage.
The decision also provides that Alstom must, within four years, enter into one or more long-term industrial partnerships in significant sectors in which it operates. Alstom is to find partners for major activities in the transport and energy sectors, with such partners operating jointly with it in the fields in which the aid will cause the most sensitive distortions of competition. In addition, the Commission regards implementation of the partnership commitment as essential to dispelling any doubts as to the long-term viability of the firm.
The decision provides that the partnerships will, in principle and unless otherwise expressly authorised by the Commission, be concluded with firms that are not, in effect or in fact, controlled by the French government, the aim being to ensure that there are no state aid elements that would make the partnerships incompatible with the EU Treaty. The decision provides that the French authorities must inform the Commission every three months, of the measures taken and results obtained as regards partnerships. In the energy sector, an initial partnership will be established for hydro power, with a joint venture being set up under joint control..
The French government has undertaken to divest itself of any capital stake within twelve months of Alstom’s obtaining an investment-grade rating. It must in any event do so within four years.