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.