Debt-ridden engineering company Alstom has clinched a €3.4 billion bailout that gives the French government a 31.5 per cent stake in the firm.
The maker of TGV high-speed trains, cruise ships and gas turbines said in a statement it had secured €1.3 billion in credit lines, mostly from its banks, plus state backing for a planned capital increase, short-term funds and a convertible bond.
Chairman Mr Patrick Kron told the Le Mondenewspaper that the package was important to safeguard the French financial system, to which Alstom owed billions.
He said the plan conformed with European Union law and was confident it would win the backing of competition regulators.
The package includes a €900 million mandatorily convertible five-year bond plus crucial state and bank backing for contract bonds and guarantees worth €3.5 billion, giving Alstom the means to win new business.
Some experts praised the scale of the plan but fretted that the European Commission, which yesterday called on France to urgently supply details of any investment, could still scupper the plan if it decides it is illegal state aid.
An EU official said that in theory, Paris should not participate in Alstom's capital increase while the matter is under review by the European Commission.
But in practice, governments always go ahead and take emergency measures to rescue ailing companies first, knowing that the Commission can take up to two years for an in-depth investigation of the bail-out.
If it finds that France has breached EU rules, The Commission may negotiate with Paris on divestments the company must make or set other conditions for the restructuring aid, such as paying back part or all of the public money received.