PSA Peugeot Citroën, the ailing French automaker, moved closer to grabbing a financial lifeline on Thursday, saying that it was in negotiations with Dongfeng Motor, a state-owned Chinese company with which it already has a joint venture, that could lead to “a potential capital increase,” reports The New York Times.
At the same time, General Motors said it had sold its 7 percent stake in Peugeot to unidentified institutional investors for undisclosed sums, a move that could open the door for Dongfeng to acquire a piece of the French company. With recent rumors that Peugeot and Dongfeng might be talking, G.M.’s stake had been considered a complication.
Peugeot, the second-largest European automaker, after Volkswagen, would say only that it was “reviewing potential industrial and commercial development projects with various partners, including Dongfeng.” The company alluded to the capital increase as one of the possibilities.
News reports from Reuters and other outlets have said that Peugeot, which is burning cash during continued weakness in its main European markets, is near an agreement to sell 20 percent stakes on sharply discounted terms to both Dongfeng and the French government.
Antonia Krpina, a spokeswoman for Peugeot, dismissed the reports as “rumors.”
Peugeot also said that it would write down 1.1 billion euros, or $1.5 billion, in assets. The company attributed the decision to “worsening automobile markets and unfavorable exchange rates in Russia and Latin America.”
Read more of this report from The New York Times.