Alstom plans €900 to €1 billion five-year convertibles with 2% coupon

By Ronda Fears

Nashville, Aug. 7 - Troubled French industrial firm Alstom plans to sell €900 to €1 billion of five-year mandatory convertible bonds with a 2% coupon, as part of a massive restructuring plan.

The plan also includes a public offering of €300 million capital shares, the issuance of €300 million capital shares to the French state and new six-year subordinated loans for €1.3 billion to €2.8 billion.

Also, a syndicate of banks will provide contract bonds and guarantees facility of €3.5 billion, counter-guaranteed in part by the French state, plus €600 million of additional short-term facilities.

Existing shareholders will be offered preferential rights to subscribe to the underwritten capital stock and convertible offerings.

The convertibles will have a 2% coupon, capitalized for the first year. The conversion ratio is 1, with an issue price of €1.40 per bond. The bonds will mature Dec. 31, 2008.

Proceeds from the mandatory convertible bond and the new subordinated loans will be partly used to repay the €550 million of outstanding bonds maturing in February 2004 and the €1.25 billion revolving credit facility maturing in April 2004.

The financial package will be integrated in Alstom's business plan and is subject to shareholder approval at an extraordinary general meeting that is scheduled for Sept. 24.

Pending receipt of proceeds from the financing package, short-term liquidity will be assured by the banks for €300 million and the Caisse des Dépôts et Consignations for €300 million. These short-term facilities will remain available until receipt of the proceeds from the disposal of Alsom's transmission and distribution sector.

Lehman Brothers acted as Alstom's sole advisor. Merrill Lynch acted as sole advisor of the French state.

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