French car maker PSA Peugeot-Citroen is in talks to divest stake to Chinese partner Dongfeng and the French state, in order to raise as much as EUR3bn in a capital increase.
The company plans to conclude a draft agreement with state-owned Dongfeng Motor and the French government in 2013, which allows both parties to contribute EUR1.5bn each to acquire 20% to 30% stake of the company, reported Reuters.
In response to the report, the company issued a statement reaffirming that it was examining new industrial and commercial projects with different partners, together with the financing that would accompany them.
The French firm, which is struggling to lower costs and losses, is seeking support from its Chinese partner Dongfeng or another automaker through this deal.
PSA Peugeot-Citroen chief executive Philippe Varin was quoted by Reuters as saying that Peugeot was on track to beat its 2013 goal of halving its industrial cash burn to EUR1.5bn.
The EUR3bn cash injection will result in loss of 68% of PSA's market value as well as 40% of the new share capital. It will also dilute the 7% stake held by American partner General Motors.
The Peugeot family would lose control of the company as the cash injection would dilute its 25.4% stake and 38.1% in voting rights.
