Lovells

Today, the European Commission has adopted a positive decision declaring that the aid granted by the French State to engineering group ALSTOM fully complies with EC State aid rules.  Lovells has been advising ALSTOM throughout the State aid proceedings.  

In August 2003, a financial restructuring plan was adopted by ALSTOM's banks and the French State. State aid measures were notified to the Commission by the French Government and the Commission launched the usual investigation procedure. However, in September 2003, the Commission threatened to adopt a suspension injunction against the immediate capital increase by the State because this measure was considered irreversible. After extensive negotiations with the French Government and ALSTOM, assisted by its main banks, the Commission finally waived this threat and extended the normal State aid investigation procedure to a modified aid package in October 2003.  

The positive decision of the European Commission allows ALSTOM to strengthen its equity, extend its bonding capacity to cover the commercial needs for the next two years, to confirm its current scope of activities and stabilise its shareholding structure with the French State becoming an important minority shareholder pending the Group's recovery. The Ordinary and Extraordinary General Assembly of ALSTOM scheduled for 9 July 2004 is called to approve all relevant measures with the support of the Commission's decision adopted today.  

The Commission's decision relies upon a thorough examination of the case. It confirms the adequacy of the restructuring plan to restore ALSTOM's long-term viability and the fact that the compensatory measures avoid any undue distortion of competition. Finally, it finds the aid to be limited to the strict minimum to restore ALSTOM's viability, the company contributing as much as possible to the restructuring costs. 

Lovells has advised ALSTOM continuously in relation to the dialogue between the Commission and the French authorities (the only formal parties to the State aid proceedings). It contributed to all written submissions to the Commission, including responses to third parties' observations and participated in the negotiations on the amended refinancing package. Moreover, contributing to the definition of long-term measures compatible with EC State aid rules and to the negotiation of the terms of balanced compensatory measures required by the Commission led to today's positive decision.  

The Lovells team advising on State aid was led by Jacques Derenne, competition partner in the firm's Brussels office.  The team, which consisted of Brussels associates Alix Müller-Rappard, Chris Guirado, William Broere, Katrin Salwén and Alexandra Deege, worked closely with ALSTOM's senior management.  

Jacques Derenne, the Lovells partner who advised ALSTOM on the State aid issues, said:  

"Today's decision is the result of close co-operation between ALSTOM's management and the Lovells team in co-ordination with ALSTOM's banks and the French authorities. This decision allows our client to implement a far-reaching financial restructuring supported by its banks and the French State. The decision rigorously applies the State aid rules and guarantees ALSTOM's long-term viability while allowing for the maintenance of an effective competition structure in the markets in which ALSTOM operates.  The remedies described in detail in the decision reflect the constructive approach by all the parties involved in the procedure."