PARIS (Reuters) - French carmaker PSA Peugeot Citroen will name representatives of the French state and trade unions to its supervisory board in return for a financial guarantee from the government, Prime Minister Jean-Marc Ayrault said on Wednesday.
Ayrault said he had also asked Peugeot CEO Philippe Varin to redesign a restructuring plan involving some 8,000 job cuts and the closure of a plant near Paris. He also said the struggling carmaker should halt dividend payments and share buybacks until its finances were back on an even keel.
“The government has no intention of making gifts without demanding anything in return,” Ayrault told France Inter radio.
“There will be an independent administrator designated by the state. The workers will also be represented on the board. That is very important,” he said.
“We also ask the PSA group not to pay dividends, stock options or buybacks - that would be scandalous - and to concentrate on turning the company around.”
Peugeot is seeking 11.5 billion euros in refinancing for its struggling car loans division, the carmaker said on Wednesday as it posted a 3.5 percent decline in third-quarter sales.
A source close to the talks told Reuters on Tuesday the government would provide between 5 and 7 billion euros in financial guarantees for the lender, allowing it to access funding at lower rates despite a downgrade to Peugeot’s credit rating.
Peugeot faces a widening competitiveness gap with rivals such as Volkswagen AG, which are vying for a slice of the shrinking European car market.
Moody’s decision to slash Peugeot’s rating this month to Ba3, three notches below investment grade, threatens to widen that gap even further.
Reporting By Daniel Flynn; editing by Mark John
Our Standards: The Thomson Reuters Trust Principles.