Peugeot gets government rescue as crisis deepens
By Laurence Frost and Gilles Guillaume
PARIS (Reuters) - PSA Peugeot Citroen unveiled a government-backed refinancing deal for its lending arm as the struggling French automaker's financial position deteriorated further, sending its stock to historic lows.
Europe's second-biggest automaker said it was close to an agreement with creditor banks on 11.5 billion euros ($14.9 billion) of refinancing and had won state guarantees on 7 billion euros in further borrowing for its Banque PSA Finance.
In return, the automaker agreed to appoint government and union board representatives, halt dividend payments and scrap stock options for its top executives.
"Banque PSA is now government-backed," London-based Credit Suisse analyst David Arnold said. "It's becoming increasingly obvious that selling assets won't stem the cash outflow."
Peugeot shares were down 6.5 percent at 5.45 euros as of 0801 GMT, touching their lowest levels 1986. The stock has plunged 48 percent this year, contrasting with a 20 percent gain by the Stoxx Europe 600 autos & parts index.
Europe's car market as slumped as consumers find their budgets hit by unemployment and government austerity. The Peugeot rescue coincides with the news that Ford Motor Co will close a factory in Belgium employing 4,300 workers as it tries to stem losses in the region.
Peugeot is scrapping more than 10,000 jobs and a domestic plant to stem losses approaching 200 million euros a month, while developing future vehicles with General Motors to deliver more savings in five years' time.
But its restructuring efforts have proved to be too little, too late to counter the effects of Europe's brutal auto-market slump. Continued...