French owner of Britain's biggest railway factory to raise £1.5bn amid race to pay off debt

An attempt to restore Alstom's financial position has paid off amid the threat of closure of the Lychurch Lane railway plant. Photo: Asadur Guzelyan

The French company behind Britain's largest railway plant is to raise €1.75bn (£1.5bn) to fight debt.

Alstom, which owns the Litchurch plant Lane in Derby The company, which employs 3,000 people, said the sale of shares and bonds, as well as an already announced €700 million share sale, would prevent its credit rating from being downgraded to junk.

Last year the company announced plans for a €2 billion refinancing after it discovered a sharp drop in cash flows linked to delays in deliveries of trains built at the Derby plant it inherited when it took over Canadian rival Bombardier in 2021.

The announcement last October sent shares of Paris-listed Alstom falling by more than a third and raised the threat of a credit rating downgrade after ratings agency Moody's placed it under watch.

Henri Poupart-Lafarge, Alstom's chief executive, said on Tuesday that the refinancing meant Alstom was now «on a stronger basis for sustainable earnings and cash generation.»

Alstom intends to sell shares worth 1 billion euros and the issue of hybrid bonds for 750 million euros no later than September. Moody's has affirmed Alstom's credit rating and will change its outlook to stable after the transactions close.

Alstom CEO Henri Poupart-Lafarge is in control of restoring the company's financial balance. Photo: JOEL SAGET

An attempt to restore Alstom's financial position has come to fruition amid the threat of closure at Litchurch Lane, Britain's oldest and largest surviving railway works.

The process of cutting 1,200 workers began after the last production work was completed in March, and the entire plant will be closed by the end of the year.

Job cuts appear to have been averted after a rescue package including an order for 10 new commuter trains for the Elizabeth line was announced in April following talks between Alstom and Mark Harper, the transport secretary, but a deal has yet to be signed.

< p>An Alstom spokesman said the company was in a “period of intensive negotiations” with the government and Transport for London, which will operate the new trains, and that a deadline had been set for the end of this month to complete negotiations.

Construction of the new trains is planned to begin in early 2025, closing the gap until work on the High Speed ​​2 express fleet begins in mid-2026.

Construction of the new trains is planned to begin in early 2025.

< In January, Alstom sold a 20% stake in Russia's Transmash to the locomotive maker's other shareholders for €75 million and agreed to sell its North American signaling business to Germany's Knorr-Bremse in a deal expected to fetch €630 by the summer million euros.

Alstom, which is considered the world's second-largest train maker after China's CRRC, reported profits of 997 million euros in the year to March, up 17%. Net debt is around 3 billion euros.

Mr Poupart-Lafarge said the recovery would be supported by higher orders, taking the order book to 92 billion euros, which «provides good visibility into future sales» .