French train manufacturer Alstom announced on Monday that it has successfully completed the sale of its North American conventional signalling business to Knorr-Bremse for $690 million. This transaction marks a significant step in Alstom’s broader strategy to streamline its operations and manage its financial obligations.
Deleveraging Plan Achieved
The completion of this sale is a key milestone in Alstom’s €2 billion ($2.2 billion) deleveraging plan, the company stated. This plan was initially revealed in April as part of a broader strategy to reduce the company’s debt. In May, Alstom elaborated on the plan, which also includes a $1 billion rights issue supported by its major shareholders.
Alstom’s Strategic Shift
As the world’s second-largest train manufacturer following China’s state-owned CRRC, Alstom continues to hold significant contracts, including projects for Britain’s HS2 high-speed railway and the largest train tender in Danish rail history. The sale of the North American signalling business aligns with the company’s efforts to focus on its core operations and reduce financial strain.
Impact of Recent Acquisitions
Alstom’s cash flow issues have been partly attributed to problematic contracts inherited from its 2021 acquisition of Bombardier’s rail business. The sale of the North American unit is expected to alleviate some of these financial pressures and support the company’s ongoing restructuring efforts.
Conclusion
The successful sale of its North American signalling business marks a pivotal moment for Alstom, reinforcing its commitment to reducing debt and refocusing its business strategy. As the company navigates through its financial challenges, this sale represents a crucial step in stabilizing its operations and securing its position in the global rail industry.
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