Alstom's bank debt has continued to climb as the troubled French engineering giant pursues a EUR2.2 billion share issue as part of a state-sponsored bailout. The '06 and '08 senior bank loans have climbed from the mid-80s to trade actively at the 96-97 and 94 1/2-95 1/2 context, respectively, said debt investors.
The rescue package, which has been approved by the European Commission, includes a EUR1.7 billion rights issue and a EUR500 million debt-for-equity swap for lenders, a trader explained. Existing shareholders can purchase shares at 40 cents. Meanwhile, debt holders have the right to convert debt into equity at 50 cents, the trader noted. "The question of whether they'll decide to convert debt into equity is whether the price [of equity] will be attractive enough to make the swap," one dealer underlined.
The shares will start trading ex-rights on Tuesday. Alstom's equity is currently changing hands at 68 cents. "At the current equity prices the debt-to-equity swap is marginally attractive," the trader said. The tender period will end on July 30. The lender's decision will depend on the stock price between July 20-30, the trader noted. Emmanuelle Châtelain, an Alstom investor relations official, did not return calls.