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article imagePeugeot 'approves' capital hikes by French state, Chinese partner

By AFP     Jan 19, 2014 in Business

The board of struggling French carmaker PSA Peugeot Citroen has in principle approved capital boosts by the French state and its Chinese partner Dongfeng, two sources close to the matter told AFP Sunday.

They will inject a total three billion euros ($4 billion) into the company under terms yet to be defined, one of the sources said after a meeting by the board.

Europe's second-largest carmaker has been looking to shore up its finances and secure a stronger beachhead in China, the world's top car market, since the slump in European auto sales forced it to seek a state bailout for its finance arm in 2012.

PSA reportedly hopes to be able to present the outline of a deal with Chinese state-owned carmaker Dongfeng and the French state to investors when it discloses its annual results on February 19.

The French carmaker hopes the deal will be sealed before a visit by the Chinese president to France planned for the second quarter of this year.

US company General Motors sold off its 7 percent stake in PSA last month, saying the French carmaker no longer needed its support, although their alliance in Europe is set to continue.

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