FRANCE: European Commission approves PSA Peugeot Citroen EUR7bn State guarantee
PSA Peugeot Citroen has welcomed today's (30 July) news the European Commission (EC) has approved a French State guarantee of EUR7bn (US$9.3bn) covering bond issues by Banque PSA Finance until December, 2016.
The Commission cited PSA's updated restructuring plan, which it said would help the Group return to viability, while limiting the distortions of competition caused by State aid.
PSA said France had made a number of undertakings to the EC, including an agreement from the automaker if its net debt exceeded a certain threshold, it would take measures to reduce it.
Equally the Commission's prior approval is required for any acquisition by PSA and its subsidiaries for an amount exceeding EUR100m a year, while Banque PSA Finance has pledged not to reduce the spread currently applied to wholesale financing for Peugeot and Citroen dealers.
In addition, the undertakings state if the Bank's penetration rate in the leading European countries increases noticeably from current levels, it will have to pay a higher guarantee commission to the French government.
An independent expert will also be appointed to help the EC in checking PSA Peugeot Citroen is in compliance with its obligations.
"Following an in-depth investigation, we have arrived at a formula which allows PSA to restructure in accordance with clear limits, reducing to a minimum the damaging effects for competitors who have not received support from public funding," said Commission Competition vice-president, Joaquin Almunia.
"This is a balanced result which offers the PSA group the chance to make a new start on a sound basis."