The family's consent is needed so PSA can announce, alongside 2013
results on Wednesday, a memorandum of understanding (MoU) on a
recapitalization deal under which the French state and Chinese
partner Dongfeng <0489.HK> will both take direct stakes in the
Peugeot is also expected to announce a separate European car loans
alliance with Spain's Banco Santander <SAN.MC>.
Both projects will be on the table of board meetings of the Peugeot
family holdings FFP and Etablissements Peugeot Freres on Monday, a
source close to the family said.
"They will decide their position on both the MoU and the Santander
project," the source said.
Peugeot, battered by a prolonged slump in demand for cars in Europe
and sustained by 7 billion euros of state guarantees, has been in
talks with Dongfeng for months over a rescue plan that would see the
Chinese automaker and French government take matching stakes.
Sources familiar with the matter told Reuters after a new round of
talks in China this week that PSA reached an outline deal with
Dongfeng and the French state to raise up to 4 billion euros ($5.5
billion) in fresh capital and deepen cooperation with the Chinese
The Peugeot clan, which has controlled the company since the early
days of the automobile in the 19th century, currently has a 25
percent stake commanding 38 percent of voting rights.
The deal approved in principle by the board would make its holdings
fall to 14 percent, a level equal to those of the French government
and Dongfeng, sources said.
A key unknown at this stage is the position of Thierry Peugeot,
currently head of the group's supervisory board and a fervent
advocate of maintaining the group's independence.
[to top of second column]
In parallel, Peugeot is close to reaching an agreement with Banco
Santander on a European car loans alliance aimed at eventually
replacing the French state guarantees that are keeping the carmaker
afloat, sources also told Reuters last week.
Under the agreement, Madrid-based Santander would enter 50-50
joint ventures with Banque PSA Finance in European markets and pay
cash to acquire a portfolio of loans from the carmaker's financing
arm, the sources said.
The planned share sale to Dongfeng and the French government may be
the French automaker's last survival hope after the failure of
earlier deal talks with U.S.-based General Motors <GM.N>.
The accompanying industrial plan would see Peugeot and Dongfeng
retain and expand their existing joint venture, increasing research
and development cooperation with a view to expanding into South East
Asian markets, according to the sources.
The final deal will be subject to approval by a shareholder meeting
later in the year.
(Writing by Sybille de La Hamaide,
editing by Mark John, John Stonestreet)
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