Alstom in crisis | The action plan is “necessary,” says the CDPQ

After seeing the value of its investment in Alstom melt like snow in the sun, the Caisse de dépôt et placement du Québec (CDPQ) believes that a change of direction was necessary within the French rolling stock giant, still in crisis.

Owner of Bombardier Transportation since January 2021, the French multinational was once again shaken on the stock market on Wednesday, despite the announcement of a debt reduction plan, the elimination of 1,500 jobs around the world and a possible issuance of actions in order to replenish its coffers.

The restructuring also affects the top of the company, since the current president and CEO Henri Poupart-Lafarge, in office since February 2016, will see his role reduced from July 2024. He will retain his functions as CEO, but he will no longer lead the board of directors, a mandate which will be entrusted to the former CEO of Safran Philippe Petitcolin.

“Alstom has undertaken a necessary action plan, both operationally and financially,” underlines Kate Monfette, spokesperson for the CDPQ, in a statement. We also welcome all the measures taken to improve governance. »

The spokesperson did not want to say whether the Fund had specifically demanded changes to orders at Alstom.

The company has been struggling on the Paris Stock Exchange for a little over a month. In particular, it expects to show a hole of around CAN 1 billion in its reserves due, in particular, to major contracts which always give it headaches.

Alstom hopes to restore luster to its results by reducing its debt by 2 billion euros (3 billion CAN) by March 2025. It currently stands at 3.4 billion euros (5 billion CAN). To achieve this, the manufacturer of trains and rolling stock is planning asset sales in the hope of raising up to 1 billion euros (1.5 billion CAN). We will also cut 1,500 administrative positions across the world.

“We are implementing a global action plan”, in particular to reassure the rating agencies and respect “our medium-term objectives”, affirmed Mr. Poupart-Lafarge.

Tumble

The world’s number two rolling stock company clearly has work to do before regaining investor confidence. The latter were still skeptical on Wednesday. Despite the announcement of a recovery plan, the company’s stock dropped 15% on the Paris Stock Exchange on Wednesday, closing at 12.04 euros.

Since the start of the year, the stock market plunge is 48.5%.

This stock market debacle has significant repercussions on the value of CDPQ’s investment in the French giant. It has collapsed by around 70%, or CAN 2.9 billion, since January 29, 2021, when the multinational officially got its hands on Bombardier Transportation.

The nest egg of Quebecers, who owned approximately a third of Bombardier Transportation, had converted its stake in Alstom in addition to buying shares at a price of 40.67 euros. The investment was then estimated at CAN 4.1 billion. On Wednesday, the block of shares held by the Quebec pension plan manager – Alstom’s largest shareholder with a 17.2% stake – was worth only CAN 1.2 billion.

It was not possible to know whether the ax would fall in Quebec, where Alstom has 2,100 employees, including 950 at its Saint-Bruno-de-Montarville facilities, where the company’s Americas headquarters is located.

A spokesperson, Adrien Vernhes, says it is “too early” to answer this question.

“Discussions will take place over the coming weeks with each of Alstom’s main regions on the measures to be taken to respond to the general orientations announced at group level,” he wrote in an email.

With Agence France-Presse