PSA Peugeot Citroen, Europe’s second-largest carmaker, is likely to receive European Union approval for a French government bond guarantee for its banking unit, according to three people familiar with the matter.
The decision may be announced before Paris-based Peugeot reports its first-half earnings next week, said one of the people, who asked not to be identified because the negotiations are private. Talks focused on Peugeot’s restructuring plan, which include shutting a plant in its home country and slashing 11,200 jobs, rather than the amount of aid, another person said.
The French government offered to guarantee as much as 7 billion euros ($9.26 billion) in new bonds for Peugeot’s Banque PSA Finance unit to help the carmaker keep down borrowing costs, which is key to offering loans to buyers that are competitive with rivals such as Volkswagen AG, the region’s biggest automaker.
“We are very close to a final decision,” EU Competition Commissioner Joaquin Almunia said in an interview in the French newspaper Le Figaro. “It is a very good work, on both sides.”
The regulator in February granted temporary EU approval for the state to guarantee 1.2 billion euros of bonds at Banque PSA Finance, which the carmaker’s finance arm successfully sold in March.
Pierre-Olivier Salmon, Peugeot spokesman, declined to comment.
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