Deal engineering

16 January 2003

The French engineer has made slow progress on asset sales. And not all of it counts towards debt reduction. Falling orders threaten to drain cash. Alstom must sell businesses to keep its creditors on board.

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Alstom, the French engineering group, said orders for the nine months to end December were 14% lower than in the same period of the previous year. Sales fell 9%.

The problem was acute in the power division, which has in the past accounted for roughly half of Alstom's underlying profit. Orders here fell by 21%. The power business is suffering a sharp cyclical downturn in the US.

The group said more than E450m of disposals had completed or been agreed. However, twothirds of this total related to saleandleaseback of property, which won't all count towards debt reduction. Alstom's Restore Value restructuring plan foresees the company selling E1bn of industrial assets by March 2003.

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