France yielded on Tuesday to European Commission demands that it find an industrial partner for Alstom within four years, paving the way for a swift deal on bailing out the troubled engineering firm.
The agreement in Brussels opens the door for other firms to control Alstom divisions that make high-speed trains and power generation equipment, rather than the all-French solution that Finance Minister Nicolas Sarkozy had sought.
"I had a long talk with Mr. [European Competition Commissioner Mario] Monti. I think we can say that we have reached an agreement that is satisfactory for everyone," Sarkozy said in London about the prickly issue of industrial partners.
At almost the same moment, Monti told reporters after a speech that that he hoped to complete the bail-out plan in the next few hours. Asked when it would go to the full European Commission he said: "In the next few weeks."
Among the unsettled issues were the quick divestiture of some Alstom assets, the final wording of the deal and the backing of bankers.
Sarkozy said he hoped to reach a deal with bankers within hours.
The pieces began falling into place on the eve of Alstom's annual results, and the company was expected to unveil details along with its results.
"The [French] state commits itself that Alstom will conclude one or more industrial partnerships within a deadline of four years," the Commission quoted a joint text as saying.
The government orchestrated a 4.7 billion euros (US$5.68 billion) bail-out for Alstom last year but a key part of that plan -- converting government debt into shares -- has yet to be approved by the Commission. Meanwhile the cash from last year's deal is already running out and Alstom's banks are pressing for a more drastic solution.
Alstom needs its lender banks to back the bailout, which sources close to the deal say will include a debt-for-equity swap and rights issue worth a total of at least 2 billion euros.
Alstom and the French government made no comment but Siemens -- long a suitor to buy some major Alstom assets -- said that once the final package was concluded, "we will look at it carefully."
A London analyst said the German engineering giant would be loath to invest in Alstom unless it was in the driving seat.
"From having worked with Siemens, there is no way they'd agree to this unless they had significant control," he said.
Swiss engineering group ABB also put itself forward as a potential partner for Alstom's turbines division.
"We are a possible partner for the turbines business in the time frame put forward by Brussels," Frankfurter Allgemeine Zeitung quoted ABB chief executive Juergen Dormann as saying.
The deal scuppers French efforts to find a national solution for the employer of 70,000 and comes just three weeks before European elections where the government is expected to get a drubbing from an electorate disgruntled with high unemployment and economic reforms.
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