PSA says that capital increase is going very well

Article by Christian Andrei, 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:


Login or Create new account to add a comment!


So, it is official! The new Honda Clarity FCV has the longest verified range of any zero-emissions vehicle currently on the road in the United States. One of the main...
by - October 27, 2016
Many have been anticipating Mercedes-Benz Vans’ newest luxury pickup truck, the X-Class. While Mercedes-Benz has yet to reveal the official production version of the X-Class, it was kind enough to...
by - October 27, 2016
We’ve seen quite a lot of intriguing stories in the age of Internet (where the most interesting part was revealed before the story unfolds). Some are from movies and novels...
by - October 26, 2016
Many people have long known that the new 2018 RS5 was being developed by Audi AG. Enthusiasts the world over were excited when a prototype was seen running on the...
by - October 26, 2016
It was only recently when BMW officially debuted the new 2017 5-Series Saloon (G30) online. At that time, this range revealed that it had driving dynamics that was the best...
by - October 26, 2016