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:

Pin It

Comments

Recommended

In a leaked image following a presentation held in China, we learned that Czech automobile manufacturer Skoda will soon unveil 2 more new SUVs in China, resulting in a four-model...
by - March 24, 2017
McLaren is said to be designing the next generation of Sports Series, which could include a V6 hybrid among its powertrain options. It was earlier reported that the British automaker...
by - March 24, 2017
To the proud owners and owner-to-be of the Porsche 991 Carrera GTS, there's good news for you all. German automobile manufacturer Porsche recently confirmed to the public that the Porsche...
by - March 23, 2017
McLaren diehards, this is the moment that you're all waiting for. The British automaker recently publicized the teaser outline of its new automobile that will hit the streets soon, dubbed...
by - March 23, 2017
PSA seems very confident about conquering the world. The purchase of Opel/Vauxhall for €2.2 billion ($2.3B) from General Motors makes PSA the second largest car company, just behind the Volkswagen...
by - March 23, 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