PSA secures 5.3 billion euros to shore up bank arm
PARIS (Bloomberg) -- PSA/Peugeot-Citroen said its banking unit completed about 5.3 billion euros ($7.1 billion) in loan agreements as part of a refinancing plan aimed at stemming a sales decline.
The Banque PSA Finance division signed a 4.1 billion-euro five-year term loan and extended a 1.2 billion-euro revolving credit line to January 2016, PSA said in a statement today. The five-year loan was oversubscribed, and 18 banks from eight countries took part.
PSA is shoring up Banque PSA Finance as Moody's Investors Service considers cutting the unit's credit rating to junk because of slumping car sales.
The French manufacturer has struggled to match loan rates offered by rival Volkswagen. PSA's European deliveries fell 13 percent through November, leading its market share to narrow to 11.7 percent from 12.5 percent a year earlier, according to the ACEA trade group.
The refinancing is part of an 11.5 billion-euro program for the finance unit, which provides loans to dealers and car buyers. The company also rolled over a majority of its bilateral bank facilities with 50 lenders, it said today.
The term loan was increased from 3.66 billion euros after attracting demand from lenders led by BNP Paribas, Credit Agricole, Natixis and Societe Generale, the banking unit said today in a separate statement.
The company will pay interest of 370 basis points more than benchmark lending rates if its credit rating is cut to noninvestment grade, people with knowledge of the matter said on Jan. 11.
As part of the plan to bolster the banking unit, PSA also received 7 billion euros in guarantees from the French government to issue new bonds, allowing it to raise money at lower interest rates.
The carmaker still needs European Commission approval for the guarantees. The refinancing plan also included 3.1 billion euros in asset-backed securities.