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PSA set to win EU approval for state aid by next week

European Union regulators will approve next week a 7-billion-euro ($9.25 billion) French government loan guarantee for PSA/Peugeot-Citroen’s financing arm, HID XENON KITS sources said. The guarantee is aimed at ensuring the carmaker’s viability.

The decision may be announced before PSA reports its first-half earnings on July 31, Reuters and Bloomberg reported, quoting people familiar with the matter.

The French government offered to guarantee new bonds for PSA’s finance unit to help the carmaker keep down borrowing costs, XENON BULBS which is key to offering loans to buyers that are competitive with rivals.

The European Commission, which enforces state-aid rules in the 28-country EU, opened an investigation into the case in May to decide whether the measure distorts competition.

“We are very close to a final decision,” HID HEADLIGHTS EU Competition Commissioner Joaquin Almunia said in an interview today in the French newspaper Le Figaro. “It is a very good work, on both sides.”

A Commission source said the EU competition authority will clear the guarantee after examining concessions offered by PSA.

Discussions on the loan guarantee are focused on PSA’s restructuring plan,HID HEADLIGHTS  not on the amount of the guarantee, the source said.

PSA’s restructuring plan includes shutting the Citroen C3 plant at Aulnay near Paris and cutting 11,200 jobs.

“A decision in favor of PSA would secure access to refinancing for PSA’s financial services business which is crucial,” said Sascha Gommel,HID XENON KITS  an automotive analyst with Commerzbank in Frankfurt.

Peugeot is also in talks with banks on options to shore up its finances including a capital increase and selling assets such as a stake in Banque PSA, people familiar with the matter told Bloomberg. XENON BULBS The talks are still open and there’s no clear direction yet, the people said.


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