A EUR1.6 billion loan agreed by Alcatel-Lucent has raised concerns with the French government because the company is using its patents as collateral.

The struggling equipment vendor announced the asset-backed loan last week with two banks – Credit Suisse and Goldman Sachs – but it has caused worries among the country’s politicians, according to a report in the French media.

The government fears that Alcatel-Lucent’s intellectual property could fall into foreign hands and is looking at ways to reduce that risk, said Les Echos.

The company is using the loans to meet debt obligations that are set to mature as well as to fund its ongoing restructuring.

The government is reportedly considering alternatives to intellectual property-backed loans such as reducing the amount Alcatel-Lucent is borrowing, or lessening the collateral.

Two approaches are believed to be under consideration. One is to help the company to sell assets such as its submarine cable business or its enterprise unit. The other is to set up a consortium without outside investors alongside Alcatel-Lucent to license patents, rather than sell, patents.

An asset-backed loan is just the latest way that Alcatel-Lucent has found to raise cash.  Previous suggestions have included selling whole business units, such as the submarine cable and enterprise units, as well as setting up a licensing syndicate for patents.

And the sale of patents was actually recently suggested by the company’s CFO Paul Tufano, although he emphasised this strategy applied to secondary, non-core intellectual property.

It is unclear whether the patents used to secure the current loan fall into the category of non-core or if they might be more valuable ones.

The story also reveals the political dynamic to Alcatel-Lucent’s financial difficulties which, in addition to the threat of intellectual property leaving the country, has led to job losses. Both are concerns for the French government.