No plan for Peugeot stake, says French premier

February 09, 2013 - 7:14:16 am

GRENOBLE: France’s Socialist government said it would do whatever it took to keep ailing carmaker PSA Peugeot Citroen afloat though the prime minister said the state had no current plan to buy a stake.

The comments came a day after Peugeot, suffering falling sales in a depressed European car market, highlighted the scale of its woes by taking a ¤4.1bn ($5.5bn) writedown on its plants and other automotive assets.

The future of Peugeot — maker of everything from the presidential limousine to the white vans favoured by small businesses — is sensitive given its status as a flagship of French industry, accounting for two-thirds of car production at a time when the jobless rate is at a multiyear high. 

“Regarding the purchase of a stake in this company, it is not on the agenda because PSA is not asking for it,” Prime Minister Ayrault told reporters in Grenoble, southeast France, where he was giving a speech on pension reforms.

“We do have a tool, the FSI (France’s sovereign-wealth fund), which can if necessary take a stake. But today this question is not being looked at,” Ayrault said.

A spokesman for the FSI said the organisation is not working on any plan to invest in Peugeot. Peugeot declined comment.

Although the writedown was a non-cash accounting item that does not affect Peugeot’s liquidity or solvency, it reflected Europe’s worsening market outlook and prompted speculation the state might intervene. 

Earlier, Budget Minister Jerome Cahuzac said in a TV interview that France might consider investing in Peugeot. “It’s possible,” Cahuzac told BFM Television. “This company must not and cannot disappear and we must do what it takes for this company to survive.”

Yet a source in the finance ministry played down Cahuzac’s comments, saying the priority for Peugeot was to pursue its recovery plan and strengthen its alliance with General Motors.

“The writedowns reflect Peugeot’s difficulties, namely that it concentrated too much on growing in Europe and ended up missing out on international growth and alliances,” said Harry Wolhandler, chief executive of Amilton Asset Management.  “We’re staying away from the stock for now.”