Alstom SA is cutting jobs and selling assets to shore up its balance sheet after cash-burn concerns wiped hundreds of millions of euros off the train maker’s market value.
The French manufacturer has started a divestment program to raise as much as €1 billion ($1.1 billion), it said Wednesday. Alstom also plans to reduce around 1,500 positions and is eyeing a capital increase with preemptive rights for its shareholders.
The moves are meant to quell investor concerns after Alstom slashed its full-year forecast for free cash flow last month in response to a jump in inventories and delays to a major UK project. The outlook cut prompted a selloff in the company’s stock, adding to woes from Alstom’s troubled $5.5 billion acquisition of Canadian manufacturer Bombardier Inc.
“We’ll do whatever is needed to keep this strong balance sheet,” Chief Executive Officer Henri Poupart-Lafarge said in an interview with Bloomberg Television.
With the measures, Alstom aims to maintain its investment grade rating and reduce net debt by €2 billion by March 2025. The job cuts represent close to 10% of total sales and administrative positions and won’t affect engineering or factory workers.
Nearly three years after the purchase of Bombardier’s rail business, Alstom continues to wade through costly legacy contracts from its former competitor. It has blamed mismanagement by Bombardier for delivery delays and the heavy spending needed to complete them.
Read more: Alstom Open to Asset Sales After Warning Erases $3 Billion
It’s too early to say which assets will be sold, Poupart-Lafarge said in the interview, adding that a capital increase is an option but not the company’s preferred one.
Equity and equity-like issuances, including the refinancing of certain assets, also are part of the performance program. Alstom said it remains “flexible” on the sequencing and rightsizing of such instruments.
On Oct. 31, the manufacturer signed a new €2.25 billion liquidity line with an international bank and in July will propose former Safran SA CEO Philippe Petitcolin as board chairman.
The company said last month it was expecting a delay to the UK Aventra project it inherited from Bombardier, which includes 443 trains that serve lines such as the London Overground and Elizabeth Line. Alstom said the work should be completed during fiscal 2024-25 instead of in the first half of this year.
Alstom recorded negative free cash flow of €1.12 billion in the six months through September. The company sees negative free cash flow of as much as €750 million for the full fiscal year, compared with a previous forecast of “significantly positive” results.
--With assistance from Caroline Connan and Kriti Gupta.
(Updates with CEO comment in fourth paragraph.)