(The Associated Press circulated the following article on June 23.)
PARIS — Alstom SA, the troubled French engineering group, took another step toward its financial restructuring Wednesday by negotiating new terms with its banks on about $4.8 billion in outstanding debt.
The company, awaiting European Union approval for a multibillion-dollar bailout, said it had obtained easier terms for 2004 and 2005 in exchange for some tougher conditions beginning in 2006.
Alstom shares surged on the news, rising 21 percent to close at 86 euro cents ($1.05) in Paris.
The loss-making train and power plant builder and its banks were forced to re-negotiate the loan covenants after it failed to meet a previous set of conditions.
Alstom said the deal on new agreements was “an important step” toward implementation of a rescue package presented on May 26.
The plan includes a 2.5 billion euro ($3 billion) state-orchestrated bailout designed to steer the company, which employs 77,000 people, away from the brink of bankruptcy.
Alstom was forced to re-negotiate the loan covenants after it acknowledged in March that it was set to miss its previous targets.
The group nearly collapsed last year under the weight of a crippling debt load and the 4 billion euro ($4.8 billion) cost of dealing with faults in its heavy duty gas turbine technology acquired from Swiss-Swedish rival ABB Ltd.
Downturns in the markets for Alstom’s power plants and cruise ships have also weighed on the company’s attempts to boost profitability.
Under the new debt deal, Alstom remains committed to keeping total debt below 4.4 billion euros ($5.3 billion). At the end of March, the company had debt of 3 billion euros ($3.6 billion), below the maximum 4.8 billion euros ($5.8 billion) set out in its previous conditions.
The European Commission is expected to approve Alstom’s bailout package early next month, ahead of the company’s annual shareholder meeting July 9.