PARIS (Reuters) - French carmaker PSA Peugeot Citroen (PEUP.PA) said it was reviewing options to enable its banking unit to maintain sufficient financing volumes for its clients and dealerships as the threat of downgrade to junk status hangs over the division’s debt.
PSA was responding to a report by French daily Le Figaro that the French Finance Ministry and national banks were negotiating a rescue plan for Banque PSA Finance (BPF), with a decision possible within days.
Le Figaro said the plan involved a commitment by banks to postpone the payment date of 4 billion euros ($5.21 billion) of debt and bring new credit lines of 1.5 billion to BPF, while the state would provide a guarantee for around 4 billion euros.
“The management of PSA is reviewing different options to set up solutions enabling Banque PSA to maintain sufficient financing volumes for its end customers and its dealer network for the carmaking unit and the company as a whole to function well,” a spokesman for PSA told Reuters.
He said no decision had been made regarding the terms or nature of any solution.
The decision by ratings agencies Moody’s and Standard & Poor’s to cut PSA’s debt rating in July and the former’s move to put BPF on review for possible downgrade meant BPF could be pushed into junk status “despite its intrinsic solidity”, he said.
The spokesman added that the unit had an “extremely solid solvency ratio of 13.30 percent” based on Core Tier One, a “high level of profitability” and “appropriate liquidity”.
BNP Paribas (BNPP.PA), Credit Agricole (CAGR.PA), Natixis (CNAT.PA) and Societe Generale (SOGN.PA) as well as foreign banks which represent 50 percent of the loans outstanding, are involved in the BPF discussions, Le Figaro said.
BPF finances Peugeot and Citroen dealers as well as offering credit facilities to customers.
Shares in PSA were 2.5 percent higher by 0709 GMT, outperforming a 1.4 percent gain in the European sector index .SXAP.
($1 = 0.7679 euros)
Reporting by Alice Cannet; Editing by James Regan