EC accepts Alsrom bail-out plan

The European Commission today tentatively accepted the French government’s alternative plan to bail out heavy engineering giant Alstom – removing an immediate spectre of bankruptcy.

Antitrust chief Mario Monti said under the plan – to be unveiled in Paris today – the French government planned to lend the maker of TGV trains and luxury cruise ships more than the estimated €599m originally planned.

He gave no details, but reports suggested Paris would raise €800.1m through loans that would trigger a commitment from banks to provide €2.4bn in new capital.

Under the plan, the French government could convert the loans into shares only after the EU completed its antitrust investigation and gave its approval.

Citing antitrust concerns, Monti vetoed the original Alstom rescue plan last week and threatened legal action if Paris injecting money into the company in return for shares immediately.

France has acted in “a constructive fashion,” Monti said today. He said the alternative bail out did not provide for “the French state to automatically become involved in Alstom,” removing the threat of legal action.

French Prime Minister Jean-Pierre Raffarin said it would be a “catastrophe” to let Alstom slide into bankruptcy.

The company is a major industrial force not just in France but across Europe. It employs about 10,000 people in Britain.

The company makes France’s high-speed TGV trains, luxury cruise liners and underground trains, employing 110,000 people worldwide.