PARIS (Reuters) – Peugeot-owner PSA (PEUP.PA) said on Monday it had secured a further 3 billion euros ($3.3 billion) of loans, strengthening its financial position in the wake of the hit to the global automotive industry from the coronavirus crisis.
Carmakers worldwide have been badly affected by the health crisis, first as production stalled in China, where the virus originated, and now as it spreads in Europe, where some governments have ordered unprecedented lockdowns to contain it.
Last month agency Moody’s placed the credit ratings of seven European auto makers including PSA and rival Renault (RENA.PA) on review for downgrade, citing the coronavirus crisis.
The latest syndicated loans 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, the French group added. It did not say which banks were involved.
“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.”
By 0910 GMT, PSA shares were up 8.3 percent amid a broader global equity market rally.
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, which also makes the Citroen marque, has suspended output in all its European plants until March 27 and has not given a target date for restarting production.
PSA, which is in the midst of merging with Fiat Chrysler, has also postponed its annual shareholders’ meeting to June 25 from May 14.
Separately, shares in Renault rose more than 8% after top executives from the Renault/Nissan alliance told the Wall Street Journal they intend to announce their programme for the next three years in mid-May and that billions of dollars in savings are planned.
Reporting by Sudip Kar-Gupta and Dominique Vidalon; Editing by Kirsten Donovan and David Holmes