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March 14 2002

Alstom rethinks ship financing role
French-based industrial giant Alstom, whose units include shipbuilder Chantiers de l'Atlantique, today unveiled a "restore value" plan to shareholders and analysts.

Among other things, the plan sets a target of lifting group operating margins from today's 4% to near 5% in fiscal year 2003 and 6% in FY 2005. In the marine sector, the target is a more modest 3% by Fy2005 and 5% by March 2006.

Alstom is also rethinking its role in financing shipbuilding contracts. In September 2001 Renaissance Cruises filed for Chapter 11 protection, triggering Alstom's guarantees to banks in respect of vessels supplied to Renaissance. Alstom says it has since undertaken intensive negotiations with its financing partners and has so far reduced its theoretical exposure from 684 million euros to approximately 500 million euros, with an associated 110 million euros provision. It says that charter negotiations for the Renaissance ships are already well underway, with the first ship, the R8, recently chartered to P&O.

In the longer term, Alstom says it will continue to apply rigorous credit-risk assessment on shipbuilding contracts and will progressively eliminate all vendor-financing. In addition, it has clarified the position on all its off-balance-sheet commitments.

Alstom has reviewed the theoretical credit risk of its overall marine vendor financing exposure and "has decided in the interest of prudence to take an additional global provision of 90 million euros which will be accounted for in the current fiscal year."