Struggling train maker Alstom plans to cut debt with €1bn rights issue | Rail industry

Alstom plans to raise 1 billion euros (£0.87 billion) to help reduce its debt as the world’s second-biggest train maker struggles with delayed orders amid concerns about the future of its Derby factory.

The Paris-listed company will attract investors to raise funds by September. It also plans a €750 million bond issue as part of a new €2 billion financial plan.

Alstom’s finances have been in the spotlight after customers, including some in Britain, delayed placing orders, raising concerns about cash flow and the future of the train factory in Derby. It bought the site from Canada’s Bombardier in 2021 in a deal that made it the world’s second-largest train maker after China’s CRRC.

Delays in orders last year led to concerns for staff at the plant as 1,300 jobs were put at risk. However, there are now hopes that operations at the historic site, where production has taken place since 1876, can be protected.

Last month, Transport Secretary Mark Harper met with Alstom executives and announced that the UK Department for Transport had reached “agreement in principle” with Alstom to support funding for five more trains on the Elizabeth line, in addition to the five trains confirmed in March. He added that he was convinced that “a solution is now in sight”.

Alstom was also hit in the UK by uncertainty over the order for new trains for HS2, after Rishi Sunak removed the northern leg on the high-speed line originally proposed from London to Manchester. The trains were to be built in Derby and at a Hitachi factory in Newton Aycliffe, County Durham.

Alstom is also cutting operations as part of the debt reduction plan. The strategy saw it sell its stake in locomotive maker TMH for 75 million euros in January and transfer the North American signaling business to Knorr-Bremse for 630 million euros in a deal expected to be completed later this year.

Alstom, announcing its full-year results, said its net debt position stood at 2.99 billion euros on March 31, compared with 2.13 billion euros a year earlier.

Alstom said it booked 18.9 billion euros in orders between April 1, 2023, and March 31, 2024, up from 20.7 billion euros in the previous year. Adjusted net profit fell to 44 million euros from 292 million euros in the previous year.

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Henri Poupart-Lafarge, Chairman and CEO of Alstom, said: “Alstom recorded a strong recovery in the second half of the year, with solid order intake, strong organic growth, improved profitability and free cash flow generation of €562 million.”

The UK Government chose Darby in March to be the headquarters of the new rail regulator Great British Railways, partly because of the town’s heritage. The Derby factory has built rolling stock for the railway in the UK and most recently, London Elizabeth Line.

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