PSA Peugeot Citroen denied reports that it plans to sell new shares, due to the drop of the auto market in Europe.
“A capital increase is not on the agenda,” Jean-Baptiste Mounier, a spokesman for the Paris-based company, said in a phone interview today, May 29th.
La Tribune newspaper said today that PSA Peugeot Citroen plans an eventual share sale and that the Peugeot family expressed their opinions about what percentage of the dilution they will accept, taking the information from an anonymous source. The French automaker has been cutting production capacity, disposing assets and selling bonds as it tries to restore profit in the European market, which is due to drop to a 20-year low.
PSA Peugeot Citroen plans to reduce cash spending to 50% this year and expects to reach the break-even point by 2014, after it spend 3 billion euro last year. Today the automaker also started negotiations with the labor unions in France on further spending-cut measures.
“When you look at other companies in the sector, only Fiat (F) has a weaker balance sheet,” Sascha Gommel, a Frankfurt-based analyst at Commerzbank AG with a reduce recommendation on the shares, said by phone. “The share price has increased quite a bit since the start of the year, so this gives some foundation to the rumor.”