French Paper: PSA Low On Cash

Bertel Schmitt
by Bertel Schmitt

PSA Peugeot Citroen told Reuters it is not true that it is low on cash, and that it needs to ask shareholders for an infusion. France’s La Tribune says that Peugeot is looking at a capital raise after burning through 2.5 billion euros ($3.23 billion) of cash in the past year.

“A capital increase is not on the agenda since the financial security of the group … is at a high level and was reinforced in the first quarter by the success of bond issues,” a PSA spokesman told Reuters, pointing to the 7.3 billion euros in cash reserves and 3.2 billion in undrawn lines of credit the group had as of the end of last year.

PSA, a partner of GM, does not expect a return to profit until 2015. Peugeot entered wage negotiations with the unions.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • L'avventura L'avventura on May 29, 2013

    Its increasingly likely that PSA won't survive in its current form. OECD just cut Europe's growth forecast. German's top banker at Deutsche Bundesbank, Jens Weidmann, said outright that the European crisis is far from over and is years away from recovery. 2015 for profitability is looking surprisingly optimistic. Given the rate of negative cash flow, its looking unlikely PSA will survive to see a recovery in the European automotive market. At this point, it might be a good time to think what would happen to PSA. Massive French bailout? Cash injection from a Chinese company? Acquisition by a rival (Renault? VW?).

  • Ed Berry Ed Berry on May 29, 2013

    I would not be surprised if the famously dirigiste French state saves PSA if it needs to be saved, European Union competition rules be damned. Such as via a forced merger with Renault. May I suggest the name French Leyland?

  • Readallover Readallover on May 29, 2013

    It cost GM $2 Billion to get out of Fiat. I wonder how much it will cost to get out of this deal.

    • Th009 Th009 on May 29, 2013

      I don't think they were foolish enough to give PSA a "put" option this time.