Paris: France will support the financial arm of France’s struggling automaker PSA Peugeot Citroen with 5.0 to 7.0 billion euros ($6.5 to $9 billion) in bank guarantees, a source close to the matter told AFP.
In return for the support, the French government will demand that Peugeot reduce job cuts announced earlier this year as part of a massive restructuring.
“It’s the give-and-take principal,” Industrial Renewal Minister Arnaud Montebourg told Liberation newspaper, adding that it was Peugeot who had come asking for help.
Peugeot has announced 8,000 job cuts as part of a massive restructuring and Montebourg said he expected the plan to be scaled down by hundreds of jobs.
The gesture from Peugeot should be neither “symbolic or anecdotal” Montebourg warned.
Contacted by AFP, Peugeot declined comment on the matter.
Hit by huge losses, Peugeot’s ability to find independent financing had been severely curtailed by debt rating downgrades by the major rating agencies.
At a meeting on Monday, the government and the carmaker also agreed to include on the company’s supervisory board an outside administrator who will keep the French state informed, as well as a workers’ representative, the source said.
The two new additions to the board could voice opinion on strategic decisions made as part of Peugeot’s restructuring and on any potential alliances with outside companies, the source said.
On Wednesday Peugeot is expected to reveal the state of its alliance with General Motors, the US giant that took 7 percent of Peugeot’s capital earlier this year.
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