(BFM Bourse) – The railway equipment manufacturer announced Thursday that it had completed a capital increase of 1 billion euros, completing its 2 billion euro debt reduction plan. The group must now show that its cash flow is on the right track.
Alstom ultimately did not take very long to complete its 2 billion euro debt reduction plan. Faced with the threat of a downgrade of its credit rating by the Moody’s agency after having burned more than 1 billion euros of cash in the first half of its 2023-2024 financial year, the group had mentioned this plan from the last fall.
During the presentation of its annual results in May, the designer of the TGV then set the terms of this plan, and indicated that he intended to complete it by the end of September.
Alstom finally completed it in mid-June. The company announced this Thursday that it had finalized its capital increase, launched two weeks ago. The company raised 1 billion euros by issuing 76.9 million shares at a unit price of 7 euros, reflecting a discount of 30% compared to the last session before this capital increase.
The group indicated that total demand amounted to 1.7 billion euros during this market call, reflecting a subscription rate of 173.4%. Settlement and delivery of the new titles will take place on June 17.
Following this capital increase, Alstom’s free float amounts to 75% while Caisse des Dépôts et Placements et Québec owns 17.5% of the capital and Bpifrance 7.6%.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
Progress to be made on cash
In addition to this call to the market, Alstom resorted to the issue of a hybrid bond – halfway between debt and capital – of 750 million euros and to asset sales completed or in progress. of 700 million euros to reduce its debt.
Moody’s had warned that it would raise the outlook for Alstom’s rating from “negative” to “stable” once this plan was completed. The agency had not yet announced its decision as of Thursday morning. But in all cases the specter of a deterioration in the group’s rating, which is crucial for its competitiveness during calls for tenders, has receded.
On the Paris Stock Exchange, Alstom shares started up before turning back down. The stock lost 2.3% around 10:20 a.m.
For UBS, the rapid implementation of Alstom’s debt reduction plan shows that investors have regained a certain confidence in Alstom’s stock market history.
But, in a note published on Wednesday, the Swiss bank confirmed its advice to “neutral”, judging that the market needs to see more signs of improvement in Alstom’s cash generation to be more positive.
Particularly in terms of the conversion ratio of its adjusted net income into free cash flow. UBS calculates that Alstom should reach a ratio of more than 55% over the period 2025-2027.
The group then intends to aim for a rate of 100% “over the cycle”, which seems “difficult” to UBS, given the history of the company. The Swiss bank uses a rate of 60%. But if Alstom managed to reach 100%, UBS’s price target would increase from 19 euros to more than 30 euros. That is to say an upside potential for the stock which is close to 100%.
Julien Marion – ©2024 BFM Bourse
Are you following this action?
Receive all the information on ALSTOM in real time:
