Peugeot family loses control in bail out deal

Peugeot family loses control in bail out deal

74601peu84PSA Peugeot Citroen has announced it will raise 3 billion Euro in a deal with Chinese manufacturer Dongfeng and the French government, which will see the end of the Peugeot family controlling the company.

Dongfeng and the French government will each inject 800 million Euro in return for a 14% stake in Peugeot. There is also a 1.4 billion Euro rights issue for shareholders and the market to take part.

The deal will see the Peugeot family’s 25% stake and 38% of voting rights diluted, leaving it with the same stake as Dongfeng and the French government. No one party will have a big enough stake to veto decisions.

It marks the end of an era for the Peugeot family which has controlled the 118-year old French manufacturer since 1889, and through a merger with Citroen in 1975.

The family will have two seats on the board instead of four. Thierry Peugeot loses his post as chairman. The French government and Dongfeng will each receive two seats on the board and there will be six independent directors.

Peugeot says strengthening the existing partnership with Dongfeng would capitalise on the group’s current success in the world’s largest market, China.

Peugeot reported a narrowing of its full-year net loss of 2.3 billion Euro for 2013, which was less than half the 5 billion Euro loss reported in 2012 when the manufacturer was hit by asset write downs.

Sales for 2013 contracted 2.4 per cent year on year to 54.1 billion Euro. The group also said cash consumption last year fell 86%, beating a target of reducing the figure by half.

Existing Peugeot shareholders will get warrants entitling them to more stock at the same 7.50 Euro as the reserved issue, a 40 per cent discount to their market value, raising up to a further billion euros on top of the 3 billion Euro.

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