No plan for Peugeot stake, France's PM says

Fri Feb 8, 2013 9:50am EST
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By Catherine Lagrange and Yann Le Guernigou

GRENOBLE (Reuters) - France has no plans to support ailing carmaker PSA Peugeot Citroen (PEUP.PA: Quote) with a stake purchase, Prime Minister Jean-Marc Ayrault said, cooling speculation of a cash injection to ease the company's problems.

The comment came a day after Peugeot, suffering falling sales in a depressed European car market, highlighted the scale of its woes by taking a 4.1 billion euro ($5.5 billion) write-down on the value of its plant and other automotive assets.

"Regarding the purchase of a stake in this company, it is not on the agenda because PSA is not asking for it," Ayrault told reporters in Grenoble.

"We do have a tool, the FSI (France's sovereign-wealth fund), which can if necessary take a stake. But today this question is not being looked at," Ayrault said.

A spokesman for the FSI said the organization is not working on any plan to invest in Peugeot. Peugeot declined comment.

Although PSA's write-down was a non-cash accounting item that does not affect the group's liquidity or solvency, it reflected Europe's worsening market outlook and prompted speculation the state might intervene.

"The writedowns reflect Peugeot's difficulties, namely that it concentrated too much on growing in Europe and ended up missing out on international growth and alliances," said Harry Wolhandler, chief executive of Amilton Asset Management.

"We're staying away from the stock for now."   Continued...

Citroen C3 automobiles are seen on the idled assembly line as striking employees prevent their colleagues from working at the PSA-Peugeot Citroen plant in Aulnay-sous-Bois, near Paris, February 4, 2013. REUTERS/Jacky Naegelen