State rescue deal for Peugeot
PSA Peugeot Citroen will receive €7 billion in financial guarantees from the French government.
Peugeot is asking for the added €1 billion in funding to increase Banque PSA Finance's available funding to €11.5 billion, chief financial officer Jean-Baptiste de Chatillon said on a conference call today with reporters.
Peugeot is also renegotiating some of the terms of the existing €10.5 billion in credit to secure the funding until 2015, Mr de Chatillon said.
Peugeot, Europe's second-largest carmaker after Volkswagen, needs the state backing to keep down its borrowing costs, which impact the rate paid by customers.
The guarantees mark the biggest intervention by the French government in the auto industry since 2009 when it provided Peugeot and Renault with €6 billion in loans.
Peugeot third-quarter revenue fell 3.9 per cent to €12.9 billion from €13.5 billion a year earlier, the carmaker said today.
Peugeot expects the European auto market to contract 9 per cent in 2012, it said.
"The competitive environment is getting tougher, with increased pricing pressure and ongoing deterioration in the markets of southern Europe," Peugeot said in the statement.
Peugeot is using up cash as the region's car market heads for its biggest annual drop in 19 years.
The carmaker, whose nine-month sales in the region dropped 13 per cent, said in July it will eliminate 8,000 jobs and close a factory near Paris.
Peugeot has also sold assets and issued €1 billion in new shares to raise funds.