PSA Peugeot Citroën on Wednesday confirmed its deal to raise €3bn from Chinese automaker Dongfeng and the French state, as the troubled carmaker reported a narrowing of its net loss in 2013, reports The Financial Times.
The agreement involves Dongfeng and the French government each injecting €800m in return for 14 per cent stakes in the carmaker. There is also a €1.4bn rights issue in which shareholders and the market can take part.
The hope is that the deal will not only offer a welcome injection of capital to the French group, which for years has been burning through cash, but also a platform to improve its sales outside Europe, particularly in Asia.
“The strengthening and deepening of the existing industrial and commercial partnership with Dongfeng” would “capitalise on the group’s current success in the world’s largest automobile market,” said Peugeot.
Peugeot also announced an auto-loan joint venture with Santander, a €2.7bn credit line, and a deeper partnership with Dongfeng – all in a bid to leave incoming chief executive Carlos Tavares a clean slate when he takes over in March.
Confirmation of the tie-up came as Peugeot on Wednesday reported a narrowing of its full-year net loss €2.3bn for 2013, which was less than half the €5bn loss reported in 2012 when the carmaker was hit by asset writedowns.
Peugeot’s sales for 2013 contracted 2.4 per cent year on year to €54.1bn. The group also said cash consumption last year fell 86 per cent, beating a target of reducing the figure by half.
The deal will see the Peugeot family’s 25 per cent stake and 38 per cent of voting rights diluted, leaving it with the same stake as Dongfeng and the government. No one party will have a big enough stake to veto decisions.
This marked the end of an era for a family which has controlled the 118-year old French carmaker since the early days of steam-powered cars in 1889, through a bumpy merger with Citroën in 1975, to today’s fully electric iOn model.
Read more of this report from The Financial Times.