PSA Peugeot Citroen, Europe’s second-biggest carmaker, 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 the effects of a sales drop.
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, the Paris-based company said in a statement today. The five-year loan was oversubscribed, and 18 banks from eight countries took part.
Peugeot is shoring up Banque PSA Finance as Moody’s Investors Service considers cutting the unit’s credit rating to junk because of slumping car deliveries. The French manufacturer has struggled to match loan rates offered by Volkswagen AG. Peugeot’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.
“It’s great news on one hand, giving Peugeot a lifeline, but we’re keen to hear management’s plan to make money,” said Jose Asumendi, an analyst at JPMorgan Chase & Co. in London with an underweight recommendation on the shares.
Peugeot shares advanced as much as 6.2 percent to 6.48 euros and was trading up 4.9 percent at 1:58 p.m. in Paris. That pared the stock’s decline in the past 12 months to 48 percent, valuing the carmaker at 2.27 billion euros.
The refinancing is part of an 11.5 billion-euro program for Banque PSA Finance, which provides loans to dealers and car buyers. The division 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 SA, Credit Agricole SA, Natixis and Societe Generale SA, the banking unit said today in a separate statement.
The company will pay interest of 370 basis points, or 3.7 percent, more than benchmark lending rates if its credit rating is cut to non-investment grade, people with knowledge of the matter said on Jan. 11.
Peugeot received guarantees from the French government in October of as much as 7 billion euros for any new bonds sold by Banque PSA Finance, allowing the bank to raise money at lower interest rates, as part of the financial-backing program. The carmaker, which allocated a board seat each to the state and to labor representatives in return for the guarantees, still needs European Commission approval for the guarantees.
The refinancing plan also included 3.1 billion euros in asset-backed securities.