Alstom says could return 3.5-4 billion euros to shareholders after GE deal

PARIS (Reuters) - French train maker Alstom , which is selling most of its power equipment business to General Electric , said on Wednesday it could return 3.5-4 billion euros to shareholders following the deal.

Additionally, two-thirds of the 12.35 billion euros (9.72 billion pounds) the company is to receive from GE could be used to help boost the company's balance-sheet and trim debt, it said in a statement.

The engineering group, which will refocus on its rail arm, gave the detail of the cash handout ahead of a shareholder meeting convened on Dec. 19 to approve the deal, which was struck with GE in June.

"The board wishes to ensure a solid financial structure for the group in order to address future operational needs and support its development," the company said in the statement.

Alstom is best known for making France's high-speed TGV trains but it also makes turbines for power plants. The group has suffered from weak orders for power equipment since the 2008 economic crisis that hit its cash flow and credit ratings.

When it agreed this year to sell the struggling power business to U.S.-based GE in order to focus on its better-performing rail arm, the news sparked a two-month tug-of-war with a French government worried of losing an industry champion.

The state only gave its blessing to the deal after it secured sweeteners from GE -- pledges to create jobs and to set up joint-ventures with Alstom in energy -- as well as an option to take a stake of up to 20 percent in Alstom.

Alstom had repeatedly flagged it planned to use the proceeds from the GE power deal to strengthen its rail arm with acquisitions, pay off debt and return cash to shareholders, but it had not provided a breakdown until now.

Some analysts had expected Alstom to put aside around 2 billion euros for rail acquisitions and return 2 billion to shareholders via a special dividend or share buyback.

If approved by shareholders after the GE deal is completed, cash could be returned via share buybacks, the company said.

Alstom said this month it expected its rail equipment sales to grow and generate cash this year after the business raked in record orders in the first half.

(Reporting by Leigh Thomas; Editing by Ingrid Melander)