French heavy engineering firm Alstom began its recovery plan today by selling its industrial turbines unit to Germany's Siemens for a higher-than-expected €1.1 billion.
Alstom, which is selling key units to stave off a cash crunch and pare down its €5 billion in gross debt, said the net proceeds from the deal would be about €950 million after a transfer of debt and other adjustments.
Although the firm has some way to go to placate its banks and soothe the market, analysts said the sale sent a signal that new chairman Patrick Kron was serious about addressing the firm's financial woes.
The sale gives Alstom, which makes France's ultra-fast TGV trains and is building the world's biggest ocean liner, as much as six months of breathing space at a time analysts say it is losing cash rapidly as it fights for survival.
The deal with Siemens also edges Alstom closer to its goal of raising €3 billion from asset disposals by March 2004.
In recent weeks Alstom, whose turbines generate a fifth of the world's electricity, had played down expectations of how much the unit would fetch, estimating proceeds of €700 million to €900 million.
Its battered stock shot up over 6 per cent in early dealings. At 09.10 a.m. (Irish time) it stood 4.3 per cent higher at €1.69.
The stock had dived some 60 per cent in a two-day massacre last month following the announcement of its new rescue plan. Siemens shares were steady at €42.85.