Shares plunge on investment plans
SHARES in troubled French auto group PSA Peugeot Citroen have plunged after the company’s management approved plans for Chinese group Dongfeng and the French state to take major stakes.
The shares in the automaker slumped 11.11 per cent to 10.21 (NZ$16.6) on news of the plan that would reduce the value of current shareholdings.
The supervisory board of PSA Peugeot Citroen agreed on the restructuring late on Sunday following the exit of US giant GM, sources said.
Newspaper reports have put the capital increase at about 3 billion (NZ$4.8b), a big amount relative to the group’s value on Friday of about 4.1 billion.
New shares enabling Dongfeng and the government each to acquire about 14 per cent of the group would be made at a discount of up to 35 per cent from Friday’s 11.48 share price
Under the reported terms, the Peugeot family, the current controlling shareholder with 25.4 per cent of capital, would retain an interest of 14 per cent. The exact amount of stock held by each party would depend on the amount of shares offered to the public and on the price, a source close to the matter said.
The reports said that the new shares would be issued at 7.5-€8 each, meaning an injection of about 750 million for Chinese group Dongfeng and the cash-strapped French state.
‘‘The share is falling because people are afraid of the size of the dilution implied by the operation,’’ said a Paris trader.
Without the details of plan ‘‘serious investors can’t take positions’’.
The French group, the secondbiggest automaker in Europe after Volkswagen, also announced a 4.9 per cent fall in sales to 2.82 million vehicles last year, its third year in a row of dropping sales.
But sales began to recover in the fourth quarter, climbing by 4 per cent. Sales outside Europe rose from 38 per cent of the total in 2012 to 42 per cent.