PARIS (Bloomberg) -- PSA/Peugeot-Citroen's supervisory board is sticking to a 3 billion-euro ($4.1 billion) stock-sale plan it's negotiating with France and Dongfeng Motor Corp. amid criticism by some investors and members of the controlling family.
The board "expresses its full support for the project presented by the management and has authorized it to pursue the talks with the aim to get approval from the board during its meeting on Feb. 18," PSA said in a statement on Thursday. "The company can't guarantee that the project will be successfully completed."
PSA said last month that it is in talks on selling stakes to Chinese partner Dongfeng and France's government in an initial step of the 3 billion-euro capital increase to fund a reorganization.
French Industry Minister Arnaud Montebourg said that any participation by France in a PSA capital increase would be intended to secure balanced ownership of the company, as Dongfeng is a Chinese company controlled by the government.
"We want to create a giant with global reach," and "an alliance with Dongfeng will create a relationship of equals while at the same time preserving decision center and R&D outlets in Europe," he told reporters on Friday.
Board Chairman Thierry Peugeot and his cousin, Robert Peugeot, have clashed over the strategy, with Thierry favoring selling all the new stock on the market without investments by Dongfeng or France, according to people familiar with the situation.
A French minority shareholders' association, ADAM, said separately in a letter to Thierry Peugeot this week that Dongfeng, the French state and the Paris-based carmaker's founding family may be considered as acting together in their proposal, potentially triggering a mandatory offer to buy out the other stockholders.
PSA said in January that it's targeting a formal deal with Wuhan-based Dongfeng and France by Feb. 19, when the French manufacturer reports full-year earnings.
The company hasn't specified the size of the potential stakes Dongfeng and the French state may buy, though it said they may acquire stock first and then further shares would be sold to current investors under "the preferred scenario."
Other alternatives are being considered, PSA said.
Discussions center on selling 14 percent holdings apiece to Dongfeng and France, which would each pay at least 750 million euros, according to people familiar with the matter. The Peugeot founding family would also retain 14 percent, down from their current stake of 25.5 percent of the equity and 38.1 percent of the voting rights, the people said.
The boards of the family's two holding companies, EPF and FFP, signed off last week on the two-step capital increase, according to people familiar with the matter.
PSA has burned through more than 4 billion euros in cash in the last two years as deliveries fell amid the European auto-market drop.
The new funding would be equal to 75 percent of PSA's market value and follows a 2012 share sale to raise 1 billion euros in which General Motors Co. bought a 7 percent stake that it later sold.
PSA probably lost money for the second year in a row in 2013, according to analyst estimates, as industrywide car sales in Europe, the company's main market, reached a two-decade low.