FRANCE: PSA to use EUR800m GEFCO Russian Railways sale to pay down debt
Russian Railways (RZD) has inked the contract to acquire 75% of PSA Peugeot Citroen's logistics subsidiary, GEFCO, for EUR800m (US$1.02bn) that will be used to pay down the automaker's major debt.
The deal, finalised in Paris between PSA chairman, Philippe Varin and Russian Railways president, Vladimir Yakunin, is now subject to anti-trust approval in both countries and includes a EUR100m 'special dividend' paid by GEFCO to the French automaker.
"EUR800m is including this dividend, it is part of the deal, part of the contract," a PSA spokeswoman told just-auto from Paris. "The EUR800m I guess will be used to pay our debt."
"It [deal] gives more opportunities for GEFCO to pursue its geographical development in China, India, Latin America and accelerate eastern Europe in the Republics in and around Russia and CIS countries."
The contract will allow GEFCO to tap into Russian Railways' vast network that has considerable potential for expansion.
Russian Railways is the sole owner of the rail track and key rail infrastructure in Russia and one of the three largest transport groups in the world with freight turnover of almost 2.7bn tonne-kilometres in 2011 and around 130bn passenger-kilometres.
"It [contract] will help GEFCO reinforce its position as a leader in industrial logistics as well as reduce its dependency on the automotive sector," noted the PSA spokeswoman.
"Some opportunities have been identified - it will also help GEFCO diversify its activities and competencies in the oil and gas sectors.
"It [agreement] still needs to be approved by the anti-trust authorities - we hope before the end of the year - we are pretty confident."
Separately, PSA is still waiting for the report by an external body into its current business plan that envisages cutting up to 8,000 jobs in France and shuttering its Aulnay plant near Paris.
Russian Railways was not immediately available for comment.