Around once a decade, Alstom SA suffers an oh-so-very French existential crisis. A train manufacturer prone to such frequent calamities requires a stronger balance sheet.
Shares in the French rail giant have cratered by more than one-third since it warned last week of a shocking €1.15 billion ($1.21 billion) cash outflow which investors fear puts its investment-grade credit rating at risk. Management says an equity raise is “not on the table,” but I think Alstom’s capital structure is no longer fit for purpose. A disastrous Canadian acquisition explains why.