PSA Peugeot Citroen, Europe's second-biggest carmaker, said its banking unit completed about €5.3 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 five-year term loan and extended a €1.2 billion 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.
Peugeot's European deliveries fell 13 per cent through November, leading its market share to narrow to 11.7 per cent from 12.5 per cent 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 in London with an underweight recommendation on the shares.
Peugeot shares advanced as much as 6.2 per cent to €6.48 and were trading up 4.9 per cent at 1.58pm in Paris.
That pared the stock's decline in the past 12 months to 48 per cent, valuing the carmaker at €2.27 billion.
The refinancing is part of an €11.5 billion programme 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 after attracting demand from lenders led by BNP Paribas, Credit Agricole, Natixis and Societe Generale, the banking unit said today in a separate statement.
The company will pay interest of 3.7 per cent, more than benchmark lending rates if its credit rating is cut to non-investment grade, people with knowledge of the matter said on January 11.
Peugeot received guarantees from the French government in October of as much as €7 billion 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 labour representatives in return for the guarantees, still needs European Commission approval for the guarantees. The refinancing plan also included €3.1 billion in asset-backed securities.
Bloomberg