PSA Might Get EU Approval for State Guarantee by Next Week image

Next week EU regulators will approve a French government guarantee for the financial arm of PSA Peugeot Citroen, worth 7 billion euro.

The guarantee offered to Peugeot’s financial arm will ensure the automaker’s viability. The decision is expected to be officially announced before the French automaker’s first-half earnings reports on July 31st. The French government said that it will offer new bonds for Peugeot’s financial arm to help the company keep down the costs for borrowing, which is of utmost importance for offering loans to customers.

“A decision in favor of PSA would secure access to refinancing for PSA’s financial services business which is crucial,” said Sascha Gommel, an automotive analyst with Commerzbank in Frankfurt.

In May, the EU Commission started to investigate the case to see if the measure distorts competition. A Commission official said that the European competition authority will offer the guarantee after it will analyze concessions offered by the automaker. Peugeot’s restructuring plans includes cutting 11,200 jobs and closing the Aulnay-sous-Bois plant, near Paris, which manufactures the Citroen C3.

“We are very close to a final decision,” EU Competition Commissioner Joaquin Almunia said in an interview today in the French newspaper Le Figaro. “It is a very good work, on both sides.”

Source: Autonews