By on October 24, 2012

Europe’s second-largest automaker and GM alliance partner PSA Peugeot-Citroen is being saved from the brink for the time being. PSA is putting the final touches on an agreement with creditor banks on 11.5 billion euros ($14.9 billion) of refinancing, in addition to 7 billion euro  ($9 billion) in government  guarantees for its captive financing arm Banque PSA Finance, Reuters says.

In return, PSA will put government and union representatives on its supervisory board, halt dividend payments (which had been on hold anyway) and scrap stock options for its top executives, Reuters reports.

The refinancing deal will be “finalized in coming days” and comply with European Union rules, Chief Financial Officer Jean-Baptiste de Chatillon said.

The German state of Lower Saxony opposes the Peugeot rescue plan as a possible breach of EU rules. The plan will have to be approved by the EU. Even if there is final approval, a formal investigation into the plan could delay its implementation considerably.

European Competition Commissioner Joaquin Almunia did not received any notification of the deal, but promised “a very careful assessment of what is going on,” once notified.

The stock market greeted the plan with sell orders. At the times of this writing, the PSA share was down 5.8 percent to 5.49 euros. The stock has lost half of its value this year and is at its lowest level since 1986.

 

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11 Comments on “Le Bailout Watch: Peugeot Saved By French Government...”


  • avatar
    dcars

    It’s going to get interesting in Europe with this announcement. I’m sure the German’s will oppose it, but I doubt the French will care!

  • avatar
    GS650G

    Of course this is being done, look who is president of France. They just hung a sign out that says “we’ll spend OPM to keep French businesses in business” even if they probably shouldn’t be.

  • avatar
    TR4

    21st century business plan for large corporations: Run it incompetently with huge executive bonuses, then ask the government for a bail out to save jobs and feed the children.

    • 0 avatar
      icemilkcoffee

      The european crisis is a financial crisis first and foremost. The european car makers were not at fault. Peugeot didn’t do anything particularly wrong- they just happen to have more exposure to the european collapse than the german makers because they have less sales outside of europe.

    • 0 avatar
      corntrollio

      Damn it feels good to be a bankster.

  • avatar

    Good.

  • avatar
    danio3834

    Simply more proof that money is worthless.

  • avatar
    Polar Bear

    Those commie socialist French using tax money to save a car maker. Wait for the Americans to say that is wrong and they would never do it.

    Oops.

  • avatar
    Tstag

    What is the last really big car maker that any country let collapse? MG Rover? That was actually wound down so not too many jobs would be lost.

    It’s always about jobs

  • avatar

    To everyone complaining about the state aid…

    It was the Govt that wouldn’t allow PSA to do what it would take them to stem the losses, which is to layoff tens of thousands or employees and close an assembly plant or two. The govt can’t have it both ways. You either let them cut jobs and turn their business around or pay them to continue without job cuts.

    I wrote this on the the article about PSA and Opel platform sharing deal. It applies here too.

    “PSA is no small auto maker. It sold 500,000 more units than Honda in 2011. It is still bigger than Honda even if you consider the sales losses for Honda in 2011 due to the Tsunami/Quake. With 210,000 global employment and 110,000 in France alone, there is no way the current socialist government in France will let PSA sink.”


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