PSA/Peugeot-Citroen has commenced its share issue program, offering its stock at EUR6.77 per share. The carmaker said in statement that investors have already committed to purchasing 36 percent of the stock available in the EUR1.95 billion ($2.7 billion) rights offer.
The rights offer is part of PSA’s EUR3 billion capital increase, which has already seen sale of stakes to Chinese partner Dongfeng Motor and the French states, which took on a price of EUR7.50 a share.
Erich Hauser, an automotive analyst at International Strategy & Investment Group, told Bloomberg that it was a lower subscription price than he would have thought, given the larger investors' commitment. Investors can apply to purchase seven new shares for every 12 shares already held, PSA said.
The subscription period will be from May 2 to 14, and the new stock will start trading on May 23. Dongfeng and the French state each bought around EUR1.05 billion of new stock and will purchase more in the rights offer, en route to acquiring a 14 percent stake each.
Once the rights offer is completed, the Peugeot founding family will no longer have control of the carmaker, as its stake would drop from 25.5 percent to just 14 percent PSA is partnering with Dongfeng as it expands outside Europe.
Newly installed PSA chief executive Carlos Tavares is working to cut costs and streamline product offerings to focus on more profitable vehicles.
PSA has been cutting production and jobs in order to plug its financial bleeding, particularly in the European vehicle market that has slumped for six consecutive years. It is deepening its partnership with Dongfeng to penetrate the largest auto market in the world, China.