LexInter | September 21, 2003 | 0 Comments


State participation and European law

The participation of the state in the rescue plan is essential in the plan:

the banks provide 625 million euros in bank loans while the State provides 2.475 billion in new guarantees and subscribes for 300 million euros in shares as well as 200 million euros in subordinated loans.

The Government has indicated that it has deemed it necessary to facilitate the process of negotiating this financing agreement, and to provide for State participation in its implementation “given Alstom’s place in the economy, industrial and social issues. for the company, its customers and its subcontractors, and unique technological know-how developed by Alstom in France as in many European countries “. He announced that the State’s participation in this financing agreement will very quickly be notified to the European Commission within the framework of the guidelines on restructuring aid.

Commenting on this agreement, Francis Mer said in particular: “This is neither a nationalization of losses, nor industrial interventionism. Above all, it is the great success of a negotiation involving very significant efforts from Alstom and all its creditors, to allow this great company to get off to a good start. The State facilitated this historic result by bringing together the company and more than 30 banks from all countries under its aegis, and will support it by making a financial gesture to help the restructuring of the company ”.

Alstom CEO Patrick Kron told Le Monde that “the State will naturally sit on the board of directors, with one or two representatives. He indicated that he was there to support the recovery of Asltom and that he would not. would in no case cross the blocking minority. It will come out when the group is restored “, 


” We have no reason to believe that state intervention is in contradiction with any European rule whatsoever and we believe that this support for credible industrial restructuring, over a period of time, is compatible with the rules Europeans, “ President Patrick Kron said during a press conference.

” We are presenting a viable industrial restructuring plan and the conditions under which we will implement it do not lead to distortions of competition, it aims to put Alstom in a position to sustainably maintain its competitiveness “,

The European Commission quickly expressed its doubts that private investors could subscribe ” under normal market conditions ” to identical support measures

“We demand from the company that it reduce its presence on the market and restrict to the strict minimum the element of state aid”, recalled Tilman Lueder, spokesperson for European competition commissioner Mario Monti. In addition to “significant” asset disposals, a company like Alstom must also “itself contribute to restructuring efforts, ” he added. According to European law, the plan submitted to Brussels must, in order to overcome the obstacle, aim to ensure the long-term viability of the group “within a reasonable period of time”.

The participation of the state is presented by the banks as the cornerstone of the financial construction of the rescue plan. Symmetrically, it is presented by the European Commission as the potential stumbling block of the plan

The Commission considered that the plan included “irreversible” measures that it could not endorse without a “formal” investigation and had invited Bercy to review its copy with the threat of an “injunction” which would prevent it from releasing the planned aid. . “The only way out” to quickly come to Alstom’s aid is to resort to “transitional” measures such as a short-term loan, rather than to the “permanent” measures provided for by the French plan, such as a capital increase and a long-term loan, explained Mr. Tilman Lueder, spokesperson for the Commission. 

On the French side it was emphasized that Germany helped its Holzmann public works group. 

On September 17, 2003, the European Commission opened an in-depth investigation into the French government’s aid package to the Alstom group. The European Commission noted ” that the conditions are met to adopt a suspension order aimed at the implementation and or the payment of a State participation in Alstom’s own funds as well as a subordinated loan”.However, the Commission has declared that it wants to continue these discussions with France and thus give the dialogue one last chance before issuing this injunction. The Commission has empowered Commissioner Monti, in agreement with the President of the European Commission, to adopt and implement the suspension order no later than September 22, 2003, unless the French authorities publicly commit not to implement in execution of the measures which will automatically and irreversibly imply a State participation in the equity of the Alstom group without prior approval from the Commission in accordance with the rules on State aid.

At the same time as the opening of the formal investigation procedure, the Commission indicated that it was examining the alternative measures that France would be likely to propose to avoid the decision to order France to suspend participation in the Alstom group’s equity through subscription. of capital, bonds redeemable in shares (ORAs)or through other structural and unconditional means – and to execute a loan subordinated to this group. The college has empowered Mr. Monti, in agreement with the President, to adopt a suspension order, unless the French authorities publicly commit not to implement measures which will automatically and irreversibly involve the participation of the State. to the Alstom group’s own funds without prior approval from the Commission in accordance with State aid rules.

Commissioner Monti said he remained confident that a solution would be found which would ensure the integrity of the single market without distorting competition, a necessary condition for a healthy European industry and for sustainable employment.


The investigation into State aid measures

The Commission’s investigation relates to the following measures:

– the 300 million euro treasury facility that the State made available to Alstom
– the counter 65% guarantee on the syndicated line of bonds of 3.5 billion euros that the State has made available to Alstom
The investigation will also focus  on the State’s commitment:

– to subscribe in such a way irreversible, i.e. half of a capital increase to the tune of 600 millioneuros or the same amount via ORAst

– to finance up to € 300 million in fixed-term subordinated loans.

If the planned timetable was maintained, the Commission considered that it would not have the necessary time to present its observations on these planned measures. Thus, if necessary, the Commission declared that it would ensure compliance with Community law and ensure the effectiveness of its investigation by suspending the execution of the last two measures mentioned.

At this stage, the State’s participation is estimated at 3.175 billion euros, out of a package totaling 7.1 billion financed elsewhere for the difference by private banks.

Five scenarios are evoked 

  1. a compromise on the technical modalities of the State’s shareholding,
  2. the abandonment by the banks of the state’s participation in the plan. In this case it is alleged that the banks would take a risk of abusive support
  3. an industrial white knight: the name of Areva had been mentioned, and challenged because of future privatization, that of Siemens also and challenged on account of competition law but one can imagine that the exception known as “the company default “is used, as for Moulinex / SEB, in order to justify the merger between the two companies
  4. the nationalization of Alstom, which does not seem likely to fundamentally solve the problems of European law
  5. filing for bankruptcy
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