Despite a healthy order book, shares in ‘safe haven’ conglomerate Alstom have suffered badly following the announcement that cruise liner operator Renaissance Cruises has filed for Chapter 11 bankruptcy protection, and the subsequent revelations of vendor financing by Alstom. The company lost some 2 billion euros in equity value over a two day period following the news and its shares continued to fall to about half their original value before stabilising.
Alstom has no Renaissance ships on order but had built eight ships operated by the company and has liability for a part of the long-term loans which financed them. Market response to the news was not a reaction to the company’s anticipated loss of revenue, especially in the light of a number of significant orders for its power division over the last month or so, but because of the extent of vendor financing that has now come to light, 684 million euros on this order alone. It is now known that a number of similar deals, designed to support the company’s shipbuilding facility at St Nazaire, France, have exposed the company to at least a further 589 million euros of debt.
Elsewhere the company is doing well. In Brazil, it has been awarded orders valued at more than 700 million euros for multiple unit gas turbine combined-cycle plants including a 600 million euros cogeneration plant for TermoRio with an electrical power output of more than 1000 MW, the largest cogeneration plant in South America; two gas turbines for the expansion of the Piratininga power plant, located near São Paulo, and a seven-year O&M contract for a gas-fired cogeneration power plant in Brazil’s Mataripe worth about 70 million euros.
