PSA says that capital increase is going very well

Article by Christian A., on March 23, 2012

The 1 billion euro ($1.3 billion) share sale of PSA/Peugeot-Citroen had every indication of succeeding as of last Wednesday since after the bidding ended, PSA shares closed well above the issue price of the new stock. This ensures the success of the operation, according to an unnamed banker insider. This makes the automaker free to concentrate on the next obstacles such as downsizing European production and making sure that its alliance with General Motors would work.

The banker said that the capital increase is going very well. The issue on share gives PSA a chance to save itself while permitting GM to get the size of a 7% stake it agreed to purchase under the alliance plan announced on Feb. 29. After this is completed, the refocus of the attention on PSA's bigger challenges such as carrying out politically fraught plant cuts and implementing the GM deal will return.

Barclays Capital analyst Michael Tyndall said that there has to be details on the areas where savings could come out. He added that investor expectations also increasingly expand since there will ill be more plant closures in Europe. Tyndall added that European auto market conditions appear much tougher than in 2012 compared to last year.

He added that governments can’t help out anymore so this means that the automakers are nearing “crunch time.” PSA shares went up by 1.4% to finish at 13.10 euros, equivalent to a theoretical price of 11.46 euros after dilution by the capital increase underwritten by BNP Paribas, Morgan Stanley and Societe Generale.

Meanwhile, there is an issue price of 8.27 euros reserved for current shareholders, who can select between buying the new stock or selling their subscription rights to new investors. According to the deal, the founding Peugeot family is selling over half of its rights to GM. This transaction is believed to be moving smoothly.

A source said that most of the new shares will be offered to shareholders while the rest of it will be "easily placed with new investors." PSA will unveil the results of this issue next week, according to a company spokesman. Settlement and delivery of the new shares are expected on Mach 29. PSA, Europe's no.2 carmaker, had intensified its marketing measures such as the cost-cutting. It froze key plant investments and revealed 1.5 billion euros in asset sales after its core auto division rose to a 497 million euro operating loss in the second half.

Topics: psa

If you liked the article, share on:

Comments

Recommended

Ever since the Regera premiered in 2016, Koenigsegg has been firm about increasing its coverage around the globe. Part of the idea was to ask its employees in Angelholm to...
by - February 21, 2017
There is no harm in admitting that both the conventional and the hybrid versions of the Lexus LC 500 are real stunners when it comes to its exterior styling. Even...
by - February 21, 2017
Jaguar is placing three new Ingenium engines on the F-Pace crossover, XF saloon and XE sedan for the 2018 model year. According to Jaguar’s recent announcement, the updates will also...
by - February 21, 2017
After Volkswagen snagged Toyota’s crown as the world’s best-selling automaker, there’s no stopping the Japanese manufacturer from dominating the hybrid arena. As of January 31st , Toyota’s increasing global unit...
by - February 21, 2017
There is no denying that the performance versions of the Jaguar F-Type and the Land Rover Range Rover are definitely hot – both in terms of looks and road dynamics....
by - February 21, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries