Alstom launches a 2 billion euro capital hike to finance Bombardier deal

FILE PHOTO: The logo of Alstom is seen at the company's TGV high-speed train factory in Belfort, France, February 6, 2019. REUTERS/Vincent Kessler

PARIS (Reuters) - French train maker Alstom ALSO.PA said on Monday it has launched a capital increase of around 2 billion euros ($2.37 billion) to finance the acquisition of Bombardier Inc's BBDb.TO rail business.

The capital increase will allow shareholders that own 10 preferential subscription rights to subscribe for three new shares at 29.50 euros per share, Alstom said in a statement.

The company said it expects to close the acquisition of Bombardier’s rail unit in the first quarter of next year.

French conglomerate Bouygues BOUY.PA, which owns 9.7% of Alstom, has committed to participate in the rights issue, the company said in a statement.

Alstom in September lowered its offer for the business.

The two companies announced revised terms of an agreement which gives the rail unit an enterprise value of $8.4 billion, in a deal that would allow the cash-strapped Canadian firm to pay down some of its $9.3 billion in debt.

($1 = 0.8439 euros)

Reporting by Matthieu Protard; editing by Louise Heavens and Jason Neely