With its stock down 32%, Groupe PSA has secured a further 3 billion euros ($3.3 billion US) of loans, strengthening its financial position in the wake of the hit to the global automotive industry from the coronavirus crisis. It did not say which banks were involved.
Last month, Moody’s placed the credit ratings of seven European automakers including PSA and rival Renault on review for downgrade, citing the coronavirus crisis.
PSA said the latest loans to PSA come on top of an existing 3 billion euros worth of undrawn credit lines. They have an initial maturity of 12 months, with two optional three-month extensions. “This operation reinforces our ability to face up to this exceptional situation and prepare the future,” said PSA Chief Financial Officer Philippe de Rovira. “It also proves the confidence of our partner banks in the financial strength and recognized resilience of Groupe PSA.”
Last month the French government told PSA and Renault they were entitled to help such as guarantees on loans and leeway on bills as it seeks to help companies cope with the fallout from the health crisis. PSA did not say if its latest loans had attracted any state support.
PSA has suspended output in all its European plants until mid-May and has not given a target date for restarting production.
PSA also postponed its annual shareholders’ meeting to June 25 from May 14 and that move has analysts speculating that its ordinary dividend worth 1.1 billion euros could be axed or postponed.
While the merger process is proceeding, the postponement of the AGM has raised concerns of potential cancellation or at least the postponement of the ordinary dividend for both FCA and PSA.
FCA shares are down around 45% since late February when the virus started spreading in northern Italy.
Global carmakers may end up selling between 19 and 24 million fewer cars this year, representing a 22% to 27% fall in global sales, according to a study by Alix Partners.
This means global auto companies would be below break-even, losing more than 100 billion euros in cash flow globally, the study said, adding that for every month of idled production in Europe, car makers would lose 7 billion euros of cash flow.