Bull is studying three potential life-saving options, including raising fresh funding from shareholders France Telecom and NEC [NIPNY]. Other options include a debt-for-equity swap, and investment by its management or major clients. The company is hoping a refinancing deal will be agreed before its board of directors meets on October 30. However, it warned any solution would need European Commission approval.

The main shareholders in Bull are France Telecom (16.9%), NEC (16.9%), Motorola [MOT] (16.9%), the French Government (16.3%), and Dai Nippon Printing [7912q.L] (5.3 %).

Bull is currently at the center of a European investigation. Earlier this month the European Commission finally lost patience with the French state, and decided to take the French government to the European Court of Justice over its $531.5 million (E450 million) loan made in late 2001 and early 2002.

Under European rules, companies can only receive state subsidies for restructuring once. In the past, Bull received $1.53 billion (E1.3 billion) in restructuring aid in 1993, followed by $118 million (E100 million) in November 2001, and $413.4 million (E350 million) in March 2002.

These clear breaches of European rules forced the European Commission to act after Bull missed the deadline to repay its loan. To make matters worse, it is alleged that Bull has not even paid interest on the loan, and is not in a financial position to do so.

The company employs 8,000 people and has not produced its usual half-year financial report, but in February stated that its net debt as of December 31, 2002 was $666 million, (E564 million) including $550.4 million (E466 million) owed to the French state. For the full year 2002, Bull recorded a net loss of $157 million (E133 million) on revenue of (E1.51 billion) $1.78 billion, down from $3 billion (E2.54 billion) in 2001.

The French government has a long record of breaking European Commission rules by bailing out French companies. Recent cases include state aid to France Telecom [FTE], Air France [AFV3.PA], and most recently the French government’s $3.77 billion (E3.2 billion) bailout of ailing engineering group Alstom [ALS].

This article was based on material originally published by ComputerWire.